4 steps for mutual fund investors to get started

It's a misconception that you need a lot of money to start investing
The funny thing about financial education is that it's almost never formally imparted to most people. We learn everything from algebra to geometry, but most of us never get to know how to save money or invest money or grow our wealth.
Therefore, it’s no surprise that most new investors find themselves in a tricky situation when it comes to investing money. We’re thrown face-first into a whirlpool of financial jargon and, more often than not, our Google-based research tempts us into investing in mutual funds. But, we all know that mutual funds are subject to market risks and that we should read the offer documents carefully before investing.
But what does that really mean? How exactly should you approach mutual funds? Which are the best mutual funds to invest in? And how many mutual funds should you invest in any way?
I am often faced with such questions and these are all undoubtedly crucial questions. Especially because we work hard for our money and it’s only wise to invest it smartly. I say this because, in the case of mutual funds, half knowledge can do more harm than good.
So, here is how you as a new investor should approach mutual fund investments.
Get a good wealth coach
A wealth coach is more than just an investment advisor; he/she is someone who will look at your overall financial well-being. Understand that most people have little knowledge about mutual funds and bank wealth managers are often biased. You need to talk to a wealth coach you can trust. This is usually an independent third party who is an expert and a person who is motivated to enhance your returns. The person will give you guidance and prepare you for your financial goals beyond just investments. Professional wealth coaches are usually someone who is not affiliated to any one bank or fund. They can help you set up an emergency fund, identify the right financial advisors etc.
Consult a qualified investment advisor
While wealth coaches give general life guidance of how to first prepare for emergency funds etc., an investment advisors are regulated entities. They give specific advice on which funds to buy and when to sell. There are over 3000 mutual fund options, and many people pretend to be good advisors, but only a few have the track record to prove it. Find advisors who can direct you towards quality funds because picking the right scheme is equivalent to winning half the battle. You can identify good advisors by looking at their past experience, track record and speaking with those they have worked with earlier.
Start small and automate
Don't think of investing a big amount. It's a misconception that you need a lot of money to start investing. You can start out with a simple SIP (Systematic Investment Plan). These plans will allow you to invest in mutual funds with as little as Rs 500 a month. You can set an amount that seems reasonable, but ensure that it's not inconsequential. The exact amount depends on your risk appetite, income, financial goals etc. Don't rush into things and keep in mind how compound interest works. A simple SIP calculator can help you on this front.
Second, if you rely on your memory and proactive nature to invest, you're doomed. The best of us fall prey to investing during market highs and panic selling close to market lows. It's not something you can always control and you simply cannot time the market. Therefore you shouldn't leave investments to emotions. Automate your investments through an ECS (electronic clearance service) mandate that auto-debits a fixed amount every month/quarter. Use technology and mathematics to guide your gut instinct.
Be patient and don't think too hard
Investing is a long-term process. To put things in perspective, in the world of investments, three years is short term. So, keep that in mind when you start out. You'll have to sit back and ride quite a few ups and downs. Prepare yourself for the journey and don't overthink a simple SIP. Everyday market changes have little changes on your mutual fund returns in the long term, unless something dramatic or drastic happens. So, keep yourself educated without getting anxious or nervous at every small rise and fall. Mutual Funds will teach you that patience is indeed a virtue that pays. I highly recommend you learn this lesson at the start instead of having to learn it the hard way later.

Paytm Payments Bank deposit scheme: Key things to know

The new fixed deposit scheme will be launched in early November

The new scheme will also enable savings account customers to create a fixed deposit with their partner bank

Paytm Payments Bank has announced a new fixed deposit scheme for its customers. India's largest payments bank is offering an interest of up to 7.5% on their fixed deposits (FDs) through Paytm Payments Bank's partner bank IndusInd Bank Ltd. The new fixed deposit scheme will be launched in early November. The new scheme will also enable savings account customers to create a fixed deposit with Paytm Payments Bank's partner bank, irrespective of the quantum of their investment, Satish Kumar Gupta, managing director and chief executive officer of Paytm Payments Bank, said.
Customers can instantly redeem the partial/complete amount from their fixed deposit at any time free of charge, added Gupta.

Paytm Payments Bank has also reduced interest rate on savings account deposits by 50 basis points to 3.5%. The new rate will be effective from November 9. "The RBI (Reserve Bank of India) recently cut the repo-rate by 25 basis points (bps) to 5.15%, which takes its cumulative cuts so far in the last 12 months to 135 basis points, which has prompted this move," said Gupta.

According to Paytm's official website, FDs will be booked with a maturity period that provides the highest interest rate. In case your FD is closed prematurely, before completion of the minimum period of 7 days, no interest shall be paid for the said FD, said Paytm. If your fixed deposit is closed prematurely before completion of the minimum period of 7 days, no interest shall be paid. The fixed deposit rate will be automatically renewed on maturity. The maturity period is mentioned as 13 months, according to the official website. There will be no penalty if you redeem the amount before maturity.

Customers can create fixed deposits starting from as low as Re 1 in Paytm Payments Bank's partner banks. According to the RBI's licensing and operative guidelines, the customer's aggregate balance in their payments bank account at the end of the day can not exceed ₹1 lakh.

As of April 2019, the Paytm Payments Bank have over ₹500 crore deposits in savings accounts, making it the largest payments bank in India in terms of deposits.

Monsoon ends at 25-year high; these 7 stocks look poised to gain most

At this juncture, when most macroeconomic indicators are showing signs of distress, surplus monsoon is manna from heaven as it will boost agri-sector income in the near future.
The distress in the rural economy may ease in the coming months as expectations for a good Rabi crop has grown stronger, thanks to a bumper southwest monsoon this year, which officially ended at a 25-year high.

India Meteorological Department (IMD) said that the country has recorded the highest monsoon rains since 1994, terming it as 'above normal' as the season officially ended on September 30.
"Quantitatively monsoon seasonal rainfall was 110 percent of its Long Period Average (LPA)," the IMD said.

LPA is the average rainfall between 1961 and 2010, which is 88 cm.

Monsoon is still active in several parts of the country and its withdrawal is likely to begin from northwest India around October 10, IMD said, adding that this is the longest recorded delay in withdrawal of the monsoon. Usually, monsoon starts withdrawing beginning September 1 from west Rajasthan.

Monsoon's strong show has raised the expectations of a good Rabi crop next year. This, along with the government's increased spending in rural India, is expected to ease the distress in the rural economy.

At this juncture, when most macroeconomic indicators are showing signs of distress, surplus monsoon is manna from heaven as it will boost agri-sector income in the near future.
"The revival in government spending in rural India from July as well as the settlement of major dues to the private sector (Rs 50,000 crore of Rs 70,000 crore) amid expected good Rabi crop are likely to help relieve some stress in the rural economy in coming months," said Elara Securities in a report.
Moreover, the renewed push for increasing PM Kisan transfers is also expected to provide much needed reflation in rural economy.

For the market, nothing can be more important than a healthy economy. There are some stocks that look in a sweet spot because of the increased prospects of easing rural distress. Let's take a look at some of them.

Rallis India | Buy | Target price: Rs 206

A subsidiary of Tata Chemicals that covers 80 percent of the districts in the country, it has a wide reach for its pesticides, seed treatment and other agri products and services.
"We believe a better than expected monsoon will have a positive effect on the stock and at present
levels, it is looking attractive as per risk and reward," said the brokerage.

Mahindra & Mahindra | Buy | Target price: Rs 715

A lot of steps have been taken by the government to improve the demand in rural and urban areas while at the same time various policies like Kisan Samman Nidhi, boosting the agricultural income to double in coming years is going to improve the demand in the long-term.
Also, the low-interest-rate environment should revive the demand in the coming months. M&M, country's largest tractor manufacturer, foraying in farm machinery ecosystem, should benefit from this.

"The stock is available at 50 percent of its long-term uptrend and has an attractive risk-reward at present levels. We believe the stock is a buy around Rs 550 - 500 for an upside move to Rs 640 - 715," said the brokerage.

UPL | Buy | Target price: Rs 740

One of the leaders in the industry with total crop solutions with a major presence in domestic as well as international market. It has its solutions from seeds to crop protection to post-harvest services.
There was a drop in profit due to higher input cost and acquisition of Arysta Life, making UPL one of the top 5 agricultural solutions providers with $5 billion in revenue.

ITC | Buy | Target price: Rs 352

"With strong operating cash flows, continuous capacity expansions across businesses and a healthy balance sheet, we have a positive view on the company over medium to long-term," said the brokerage.

Finolex Cables | Buy | Target price: Rs 478

Finolex looks attractive due to its leading position in electrical cables and debt-free status. However, success in its FMEG division and significant improvement in JVs are key monitories.
FY19 revenue and EBITDA grew 9 percent and 7 percent, respectively. In terms of valuations, the brokerage said it finds the stock reasonably valued.

Swaraj Engines | Buy | Target price: Rs 2,139

"We continue to expect positive growth for the tractor industry in FY20 driven by government subsidies and expect Swaraj Engines to benefit from expected state subsidy schemes also," said the brokerage.

The brokerage expects a 10 percent volume growth for Swaraj Engines and a stable margin. It also expects a 10 percent CAGR in earnings over FY19-21 to Rs 99.8 crore. "With the company's lean cost structure and strong balance sheet, we recommend a buy," said the brokerage.

Voltamp Transformers | Buy | Target price: Rs 1,846

On the strong order book, the brokerage expects the company's sales to register a 29 percent CAGR over FY19-21. The order book registered a strong growth of about 56 percent year-on-year (YoY), with order inflows growing 81 percent in Q1.

"With the plants operating at nearly 90 percent capacity, better utilisations would pave the way to higher operating leverage. Hence, softening commodity costs,  coupled with higher operating leverage assure of further margin improvement in FY20 and FY21.

"We expect margins to expand. This should result in a strong, 31 percent, earnings CAGR over FY19-21. With greater revenue assurance as well as the strengthening balance-sheet, we maintain our buy recommendation," said the brokerage.

Banking in India- Types of Banks

Banking is no new term to anyone be it homemakers, salaried people, businessmen, farmers, students or any other profession. Especially the Indian homes are well connected with banks and banking. The banking industry takes care of the finances of a country which includes credit and cash.
Banks are the backbone of the economy in a country and hence strict rules and regulations are imposed on the modus-operandi of banks. The major transactions that happen at banks are granting credits and accepting deposits from various entities.
RBI is the apex body that governs and monitors bank across India. It is responsible for regulating the monetary policy in the country.
BANK CLASSIFICATION IN INDIA
 There are two broad categories under which banks are classified in India- SCHEDULED AND NON-SCHEDULED BANKS.
 The scheduled banks include COMMERCIAL BANKS AND COOPERATIVE BANKS. The commercial banks include REGIONAL RURAL BANKS, SMALL FINANCE BANK, FOREIGN BANKS, PRIVATE SECTOR BANKS, and PUBLIC SECTOR BANKS. PAYMENTS BANK is a new introduction to the category.
 Cooperative banks include URBAN AND RURAL BANKS.
Let us understand the nomenclature better;
SCHEDULED BANKS are the banks which are covered under the second schedule of the Reserve Bank of India Act, 1934. To qualify for being a scheduled bank, a minimum of 5 lakh paid-up capital is required on the bank’s behalf. The RBI lends loan to these banks at bank rate as and when required.
 COMMERCIAL BANKS are regulated and managed under the Banking Regulation Act, 1949. These are profit making banks based on their business model. Granting loans to the government, general public, and corporate and accepting deposits counts as the primary function.
There are four types of commercial banks:
PUBLIC SECTOR BANKS
 These banks for more than 75% of the total banking business in the nation. They are called nationalized banks. The government holds the majority stakes at these banks. Post-merger, SBI is the largest public sector banks by volume. It also ranks amongst the top 50 banks in the world.
There are 21 nationalized banks in India, they are:
1. STATE BANK OF INDIA
2. BANK OF INDIA
3. ALLAHABAD BANK
4. BANK OF MAHARASHTRA
5. CANARA BANK
6. INDIAN OVERSEAS BANK
7. IDBI BANK
8. ORIENTAL BANK OF COMMERCE
9. CENTRAL BANK OF INDIA
10. CORPORATION BANK
11. ANDHRA BANK
12. UCO BANK
13. BANK OF BARODA
14. UNION BANK OF INDIA
15. UNITED BANK OF INDIA
16. VIJAYA BANK
17. DENA BANK
18. INDIAN BANK
19. PUNJAB & SIND BANK
20. PUNJAB NATIONAL BANK
21. SYNDICATE BANK
19. PUNJAB & SIND BANK
20. PUNJAB NATIONAL BANK
21. SYNDICATE BANK
PRIVATE SECTOR BANKS
 Private shareholders hold majority stakes in private sector banks. Reserve Bank of India lays down all the rules and regulations. Following are the private sector banks in India:
 1. HDFC BANK
2. ICICI BANK
3. AXIS BANK
4. YES BANK
5. INDUSIND BANK
6. KOTAK MAHINDRA BANK
7. DCB BANK
8. BANDHAN BANK
9. IDFC BANK
10. CITY UNION BANK
11. TAMILNAD MERCANTILE BANK
12. NAINITAL BANK
13. CATHOLIC SYRIAN BANK
14. FEDERAL BANK
15. JAMMU AND KASHMIR BANK
16. KARNATAKA BANK
17. DHANALAXMI BANK
18. SOUTH INDIAN BANK
19. LAKSHMI VILAS BANK
20. RBL BANK
21. KARUR VYSYA BANK
FOREIGN BANKS
 A bank operating as a private entity in India but headquartered in a Foreign country is a foreign bank. They are governed by both the country they are located in as well the country they have headquarters in. Some of these are:
 1. CITI BANK
2. STANDARD CHARTERED BANK
3. HSBC BANK
REGIONAL RURAL BANKS
 These banks were established mainly to support the weaker and lesser fortunate section of the society like marginal farmers, laborers, small enterprises etc. they mainly operate at regional levels at different states and may have branches in urban areas as well. Their main features are:
 1. Supporting rural and semi-urban region financially
2. Pension distribution and Wage disbursement of MGNREGA workers
3. Added banking facilities like locker, cards-debit, and credit
SMALL FINANCE BANKS
 These banks cater to a niche segment in the society and help with financial inclusion of sections which are not taken care of by other leading banks. They look after micro industries, unorganized sector, small farmers etc. RBI and FEMA are the governing bodies of these banks.
 These are:
1. AU SMALL FINANCE BANK
2. CAPITAL SMALL FINANCE BANK
3. FINCARE SMALL FINANCE BANK
4. EQUITAS SMALL FINANCE BANK
5. ESAF SMALL FINANCE BANK
6. SURYODAY SMALL FINANCE BANK
7. UJJIVAN SMALL FINANCE BANK
8. UTKARSH SMALL FINANCE BANK
9. NORTHEAST SMALL FINANCE BANK
10. JANA SMALL FINANCE BANK
COOPERATIVE BANKS
 Run by the elected members of a managing committee and registered under the Cooperative Societies Act, 1912 are the cooperative banks. These are no-profit, no-loss banks and mainly serve entrepreneurs, industries, small businesses, and self-employment.
PAYMENTS BANK
 This is a new and upcoming model of banking in India. It has been conceptualized and signed-off by RBI with restricted operations. Maximum of Rs. One Lakh is acceptable per customer by these banks. Like other banks, they also offer para-banking services like ATM cards, Debit- Credit cards, net-banking, mobile banking etc.

Bank deposits: Care as much about risk as you do about returns

The singularity of returns as an investment objective is the cause of most misery
"Yeh dil mange more" is not just the slogan of a popular soft drink. It is as much the money mantra of most Indian savers. Our outlook towards savings and investing is driven by singularity.
Obsession with returns
Only one thing really matters to us and we should be honest to admit it. Indian savers are obsessed by the singularity of returns. Be it retirees, senior citizens, housewives or even young millennials, we are all taught from childhood to get that little extra out of our money. We are constantly told that we are conservative and yet smart. And, taking that belief forward, we think that our chutzpah will get us that extra returns all the time.
The singularity of returns as an investment objective is the cause of most misery. Every investor knows it too well. But, everybody thinks it won’t happen to them. So, when my phone rang even during a vacation and the callers were family elders – dad's friends and my older clients who do their own thing – the singularity returned to touch my life too. The questions were on their fixed deposits in two private banks. They were worried as hell and wanted me to advise them if they should close those fixed deposits. The value of the deposits was very large. And, they all said they could not afford to lose the amount. "Why on earth did they not ask me when they deposited the money?" Some questions remained stuck in my mind voice. I could not even ask them.
The advice was simple. "Steer clear of trouble. Settle for less. Your job is not to save a bank from going under. That is the equity investor's job. And, if the equity investor fails to do her job, you get reduced to receiving just Rs 1 lakh, no matter how much money you deposited. The downside is as much yours. That would place you almost at par with the equity investor of a badly managed bank. Is that what you want to be? Would you buy the shares of that bank?"
Nothing is risk-free
They still wanted me to say that "All is well" and that things would settle. Truth be told, there was an outside chance of everything being well. But, after the IL&FS crisis, we are a very different country. And, I am not be willing to believe that what RBI did with GTB (Global Trust Bank) and Nedungadi Bank would be the default option. The law does not bestow absolute rights of protection on a depositor's money. It is limited to Rs 1 lakh. So, we simply can’t take the return of our capital for granted. There are definite attendant risks involved.
And, an investor in a bank deposit needs to rise above the singularity driven investment approach. One must think of return of capital as much as we think of return on capital. The primary investment driver must be risk and returns should be seen as a function of risk. The need for duality is urgent and wanting in our investment approach.
We must prioritise suitably. While this duality driven approach is far superior to a singularity driven one, investors collectively forget this as public memory fades quickly. Every crisis is seen in isolation, and lessons are rarely carried forward. It is important to note that the two HFCs (housing finance companies) that are presently troubled, raised money within an hour through their public debt issues just a few years ago. Singularity of returns was the clear driver.
Nobody even thought about the risks – the probability of losing capital and potential insolvency. It would not be out of place to say that most investors in those issues did not even know of the asset-liability mismatch rampant in the two companies. But the problems with the troubled banks are an entirely different story. Here, the problems have been more openly stated in the public domain for the past few years. Their stock prices were clearly ringing the warning bells like a Tsunami alert. But, depositors were clearly not bothering enough to follow these events.
The time has come for depositors to think beyond the singularity of returns. Lower returns are a better choice if they offer better certainty on return of capital. The extra one per cent is simply not worth being the primary investment driver. Choosing to earn less with better certainty and peace of mind are more holistic and sensible. I am reminded of the ad slogan for the fixed deposits of a now defunct south-based NBFC, "Life is too wonderful to be spent worrying". How I wish investors respect and value their peace of mind above their returns!

Explained: All you need to know about WhatsApp banking services

While you can ask and get details relating to your account via WhatsApp, you can’t carry out any transactions

You’ve chatted with friends and relatives for hours together using the app. As an added sweetener, you can now use WhatsApp  to reach out to banks for basic queries. Your requests are addressed on a real-time basis.

WhatsApp banking services are now offered by Kotak Mahindra Bank, Saraswat Bank, HDFC Bank, AU Small Finance Bank, etc. They help their customers receive updates and avail services via the messaging platform.

Here we seek to address some common queries about WhatsApp banking services.

Getting started with WhatsApp banking

To avail WhatsApp banking services, you first need to give a missed call to the relevant number provided by the bank on its website. This number would be different from the phone banking number of the bank. It is mandatory to give a missed call from the registered mobile number with the bank to avail banking services.

By giving a missed call, you basically provide your consent to the bank for using this service. Then, you will receive a welcome text message from the bank’s WhatsApp number. You should save this WhatsApp number of the bank in your contact list. To initiate a chat through WhatsApp for any banking service, you need to send a message typing ‘Hi’. Further, as per the on-screen instruction, you may type ‘1’ or ‘2’ and so on as per your requirement.

Yes Bank seeks to arrest further decline in stock prices, affirms strong financials

The private sector lender's share price had plunged by nearly 30 percent during intra-day trade on October 1, before closing the session down by 22.8 percent at Rs 32.
A day after a sharp fall in its stock price, Yes Bank on October 2 said the decline was mainly due to forced sale of 10 crore equity shares on the back of invocation of pledged shares by a large stakeholder.

Yes Bank also said its financials are strong, with the liquidity position well in excess of regulatory requirements.

The private sector lender's share price had plunged by nearly 30 percent during intra-day trade on October 1, before closing the session down by 22.8 percent at Rs 32.

"This fall was primarily on account of the forced sale of 10 crores equity shares (3.92 percent of the bank's equity share capital) triggered by an invocation of pledge on the equity shares of a large stakeholder," it said in a filing to the stock exchanges.

With this sale, the entire pledge stands extinguished and all sale under the same duly completed, it added.

Stock markets were closed on October 2 on account of 'Gandhi Jayanti'.
Meanwhile, Reliance Nippon Asset Management Company (RNAM) had on October 1 directed its trustees to sell the remaining shares pledged by Rana Kapoor, co-founder of Yes Bank, as a collateral with the mutual fund house, sources said.

Kapoor, who is also a promoter of Yes Bank, has less than 5 percent stake left in the private lender, and the same has been pledged with RNAM.

"RNAM has given instruction to its trustees to sell entire holding of Kapoor in Yes Bank," a source had said on October 1.

In its filing on October 2, Yes Bank also asserted that its financial and operating metrics remain intrinsically stable.

"Over the past few days, unfounded speculations regarding the bank's deposits/liquidity have been brought to its notice. In this regard, kindly note that the bank had a Liquidity Coverage Ratio in excess of 125 percent as on September 30, 2019, which is well above the minimum regulatory requirement of 100 percent," it said.

The bank's gross advances as on September 30, 2019 stood at Rs 2.32 lakh crore, as against Rs 2.42 lakh crore by June-end 2019, with a higher share of retail advances compared to June, it added.
The reduction in advances was effected to enhance capital efficiency, Yes Bank said.

"Further, deposits aggregated to Rs 2.09 lakh crore as on September 30, 2019. CASA Ratio improved to nearly 30.8 percent as compared to 30.2 percent as on June 30, 2019," it said.

Kapoor and his group entities had sold 2.16 percent of their stake in the bank worth Rs 510 crore through open market transaction on September 26-27.

After this, Kapoor and his group entities' stake in the bank came down to 4.72 percent.
Earlier last week, Yes Capital, one of the promoter entities of Yes Bank, sold 1.8 percent stake in the private sector lender.

The stake sale helped the promoter group entity mop up around Rs 240 crore.
Last month, another promoter Morgan Credits had sold 2.3 percent stake in Yes Bank for Rs 337 crore to prepay a certain part of its outstanding dues to Reliance Nippon Life AMC.