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Top Index Funds 2021 – Should you Invest?

Shitanshu Kapadia
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Top Index Funds 2021 – Should you Invest?

Index funds are specialized mutual funds that try to replicate popular stock market indexes such as Sensex, nifty etc. All the stocks in the index funds are in same proposition as that of index. The fund manager does not act as active fund manager. He simply copies respective index in order to build fund portfolio. The fund portfolio always remains in sync with index. Whenever changes in the composition of index is done the fund manager buys or sell the stock from the portfolio to make adjustments. These funds are likely to give same return as that of index. However, there will be associated tracking error. In this post, we will discuss about type of index fund and investment benefits.

Let’s try to understand index fund with example. Suppose one fund is tracking BSE Sensex. As BSE Sensex comprises of 30 stocks, so the fund also contains same stocks in same proposition. If index includes equity and other instruments such as bond the fund manager invests in other instrument also.

Index fund

Who should Invest in Index Funds?

Index funds are fund for the risk averse investor. The investors looking for predictable return in equity market with diversity can opt of these funds. As Index fund track market index and managed passively, risk will be less. The investors looking for higher returns should go for actively managed fund. Actively managed funds will give better return compared to index fund in the long term.

Index fund also carry market and volatility risks and advisable for the long term investor only. There are three types of index fund available for the investors.

  • Fund that track Sensex – 30 Stocks
  • Fund that track Nifty – 50 Stocks
  • Index Plus fund – Portion of fund in index and reminder is actively managed

Things to consider before investing in Index Funds

Important things to consider before investing in Index Funds are given below.

Tracking Error

The return generated by index fund are not at par with that of index. The deviation is return is known as tracking error. The tracking error should be checked before investing in index fund. The lower the tracking error better is fund performance.

Performance of Fund

Performance of fund is extremely important while selecting any fund. You should check historical performance and compared with benchmark index. Additionally, you should also do peer comparison while selecting fund.

Expense Ratio

Expense ratio is another important factor to consider before investing. The expense ratio of the fund should be low. Lower the expense ratio better is fund performance. Avoid selecting fund only on the basis of expense ratio.

Top Index Fund 2021

HDFC Index Sensex Fund

HDFC Index Sensed Fund as the name suggest this fund track S&P BSE Sensex subject to tracking errors. This fund is ranked moderately high. Expense ratio of this fund is very low 0.3%. CRISIL rating of this fund is 3 Star. The fund gives returns nearly equals to S&P BSE Sensex.

SBI Nifty Index Fund – Direct Plan

SBI Nifty Index Fund track Nifty 50. This fund is very high risk rated fund. Expense ratio of this fund is 0.1%. It is CRISIL 3 star rated fund. Fund capital is 1000 Cr+. It is passively managed fund. This fund has given return nearly equal to Nifty.

UTI Nifty Index Fund – Direct Plan

UTI Nifty Index also track Nifty 50. It is moderately high rated fund. The fund capital size is 3000 Cr+. Expense ratio of this fund is very low 0.1%. It is CRISIL 3 star rated fund. Tracking error of this fund is very low. This fund gives returns higher than the category average return.

Mutual Fund Tax – How to Calculate Tax on the Mutual Funds?

Shitanshu Kapadia
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Mutual Fund Tax – How to Calculate Tax on the Mutual Funds?

Mutual Fund is one of the best investment options. You can achieve whatever financial goal you have by investing money in mutual funds. Mutual funds are expected to give higher returns compared to all other investment options. You may not be aware that mutual fund gains are taxable in nature. This means when you redeem mutual funds you need to pay tax. The tax applicable to the mutual funds is based on mutual fund types and holding period. In case you want to redeem your mutual fund you should know the applicability of income tax on capital appreciation. Here is complete information on Mutual Fund Tax.
Mutual Fund Tax

Mutual Fund Returns – Dividend & Capital Gain

Mutual Funds returns are of two types dividends and capital gains. It is a known fact that these returns are dependent on the type of mutual funds.

If you have invested in dividend-based mutual funds you will be paid with a profit share of the funds. The dividend would be based on the number of units held by the holder.

In case you have invested money in a growth type of mutual funds you will not be paid with dividends but whenever you sell mutual funds unit at a higher price and earn profit it will be called capital gain. The capital gain is a profit made by you on the mutual funds. Dividend income and capital gain both are taxable on the hand of the investor.

Mutual Fund Tax on Dividend

The Mutual Fund tax rule on the dividend is changed. As per the latest rules dividend income of investors is added to the overall income and taxed as per applicable tax slab rates. Earlier dividend income was tax-free in the hand of the investors. The dividend income from mutual funds shall be subject to 10% TDS if received dividend income is exceeding Rs.5000 in a year. The TDS amount shall be used against credit against tax payable.

Mutual Fund Tax on Capital Gain

Mutual Fund tax on capital gain is based on the type of mutual funds and holding period. The holding period is also known as the term. The term is the time frame between the time of buying mutual funds and selling them. The money earned as profit is known as a capital gain. Based on the time frame this gain is divided into two types short term capital gain and long-term capital gain. The categorization detail of capital gain based on duration is given below.

Type of FundShort term capital gainLong term capital gain
Equity FundsLess than 12 monthsMore than 12 months
Debt FundsLess than 36 monthsMore than 36 months
Hybrid Equity FundsLess than 12 monthsMore than 12 months
Hybrid Debt FundsLess than 36 monthsMore than 36 months

The tax rates applicable for short-term capital gain and long-term capital gain are different.

Tax on Debt Funds

The mutual fund where debt exposure is more than 65% is known as debt mutual funds. Two types of taxes are applicable to the debt mutual funds. The first tax is applicable on the dividend income of the mutual funds. The dividend income is added to the overall income of the investor and taxed as per the applicable tax slab. The second type of tax is Short term or long-term capital gain tax. This tax is applicable when you sell your mutual funds.

If you sell debt mutual funds before 3 years’ entire profit will be added in your income and tax is applicable on the entire capital gain. In case you sell debt mutual funds after 3 years the gains will be known as long-term capital gain tax and taxed at rate of 20% after indexation. You also need to pay a surcharge on the tax.

Tax on Equity Funds

Equity mutual funds are funds where equity exposure is more than 65%. Long-term and short-term capital gain tax is applicable on the equity mutual funds. In case you hold equity mutual funds for less than 1 year you need to pay short-term capital gain. Short-term capital gain is taxed at a flat rate of 15%.

In case you hold an equity mutual fund more than 1-year long-term capital gain tax is applicable. The gains up to 1 lakh in a year are exempted in this case. For capital gain above 1 lakh in a year, you need to pay tax at the rate of 10% flat.

Tax on Hybrid Mutual Funds

The hybrid mutual fund is the combination of equity and debt mutual funds. If equity exposure is more than 65% the scheme is taxed as an equity mutual fund. In case the debt component is higher in the mutual funds it will be taxed as debt mutual funds. This means you need to know the exposure of the scheme where you are investing your money. These details will be useful when you do the redemption of your funds.

Tax on SIP

SIP is another method of investing money. Usually, as an investor, you invest your money via SIP. The SIP can be monthly, quarterly, half-yearly or annually. Now in the case of SIP tax is applicable based on FIFO (First in first out) basis. Say you decided to redeem your mutual funds after 12 months of holding period, in this case, first units purchased via the first SIP are held for more than 12 months so long term capital gain tax is applicable on that for the rest of the unit short term capital gain tax is applicable.

How to Calculate Tax on the Mutual Funds?

By now you must be clear on how to calculate tax on mutual funds. Refer to the summary table given below to calculate tax on the mutual funds.

Fund typeShort-term capital gainsLong-term capital gains
Equity funds15% + cess + surchargeUp to 1 Lakh a year tax exempted. Gains above 1 lakh are taxed at 10% + cess + surcharge
Debt fundsTax as per tax slab20% + cess + surcharge
Hybrid equity-oriented15% + cess + surchargeUp to 1 Lakh a year tax exempted. Gains above 1 lakh are taxed at 10% + cess + surcharge
Hybrid debt-oriented fundsTaxed at the investor’s income tax slab rate20% + cess + surcharge

E.g – If you have invested 1 Lakh in the equity mutual funds and you are holding period is more than 1 year. After 1 year of holding period the value of the mutual fund is 1.20 Lakh and you decided to sell all funds. The gain applicable on the fund is Rs.20000. Now in this case, long term capital gain tax is applicable, and as the gain is less than 1 Lakh you need not pay any tax.

Women Health Insurance Polices in India

Shitanshu Kapadia
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Women Health Insurance Polices in India

Women Health Insurance – Health insurance is extremely important part of our life. Health care expenses are sky rocketing and to live without health insurance policy is a risk. There are many women health insurance policies available in the market. You may be thinking that women are generally covered under family floater health insurance plan hence they don’t need any separate health insurance policy. However, health insurance needs of women are different. They are prone to many different health related issues that requires a special care.

If you are working women or housewife it is advisable to have health insurance policy or Top up policy that provides additional coverage. If you are convinced that you are required to purchase health insurance policy you should evaluate and find out which women health insurance policy is best for you. Here are detail about best women health insurance policies in India.

women health insurance

Women Health Insurance Polices in India

#1 Tata AIG Wellsurance Women Policy

Tata AIG Wellsurance is special plan for woman. Tata AIG Wellsurance provide benefits against specific illness as well as daily cash payout. The major benefits are paid as lump sum basis. There are three types of plans classic, supreme and elite. Key features of Tata AIG Wellsurance policy are given below.

  • Coverage of 11 critical benefits.
  • Daily hospitalization cash benefits in terms of regular cash payouts.
  • High hospitalization cash benefits for patients admitted to ICU.
  • Cosmetic restoration surgeries are covered as a part of accident.
  • Policy renewal allowed for life time.
  • Option to increase sum insured at the time of renewal.
  • Severity based payout.
  • Additional rider benefits available.
  • HIV, AIDS and sexually transmitted diseases not covered.

#2 Bajaj Allianz Women Specific Critical illness Insurance Plan

Bajaj Allianz also provide women specific critical illness insurance plan. This plan is somewhat different as it provides job loss cover as well as children education benefit. This plan also offers congenital disability benefit. Key features of Bajaj Allianz Women Specific Critical illness insurance plan are given below.

  • This plan provides coverage of 8 critical illness.
  • Lump sum amount paid in case of diagnosis of critical illness.
  • If women have a baby with congenital illness or disability 50% of amount will be reimbursed.
  • In case of job loss and diagnosed with any critical illness within 3 months Rs.25000 will be paid as compensation loss.
  • Future children education benefit of Rs.25000 will be paid in case critical illness is detected.
  • Occupational disease caused by working condition is not covered.

#3 HDFC ERGO Women Critical illness Plan

HDFC ERGO Women Critical Illness Plan is special plan for women. This plan provide protection against major illnesses, surgical and critical illness as well. Key features of HDFC ERGO Critical illness plan are given below.

  • Coverage to 41 different critical illness as well women specific illness.
  • Option for job loss, pregnancy and non-born baby coverage.
  • Post Diagnostic support. Second medical opinion reimbursement.
  • Instant and lump sum payment on diagnosis of critical diseases.
  • Free preventive health checkup.

Over to You

You should give importance to health insurance policy. Women health insurance policy is for single and working women. You should have health insurance coverage of at least 5 Lakh. If you are covered under family floater policy, you can opt for top up coverage plan.

Amazon Pay Later – Amazon EMI Facility – How it works?

Shitanshu Kapadia
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Amazon Pay Later – Amazon EMI Facility – How it works?

Amazon Pay Later is a facility for buying a product and paying money later. Amazon Pay later facility can also be converted to Amazon EMI Facility. You need to register for this facility before making use of it. This facility is offered by Capital Float or IDFC First bank. So, if you don’t have enough money and still want to purchase a product from Amazon this facility is useful.  Let’s explore what is Amazon Pay Later Facility and How it works?

Amazon Pay Later

What is Amazon Pay Later – Amazon EMI Facility?

Amazon leading online e-commerce platform provides the facility of paying money later for the products. You can defer payment for next month at no extra cost or you can pay money in 3 to 12 EMIs. If you opt to pay later you need not pay any extra money. However, if you opt for EMI you need to bear applicable interest cost. This facility is useful if you want to delay payment for 30 days. You need to register for this facility. Steps to register for using this facility is given below.

You require Amazon.in account with a registered mobile number. Additionally, you also need a PAN card number and bank account. You also required valid address proof. A driving license, voter ID card, Aadhaar or passport acts as valid address proof. PAN card and KYC is mandatory. You will not able to use this facility without PAN and KYC facility.

You need to open Amazon pay later registration page and follow on-screen instructions for registration.

#1 Complete KYC Facility

You can make use of the existing KYC if you have completed KYC for Amazon Pay Balance Facility. If you have not completed KYC, you need to opt for OTP-based eKYC. You can also opt for KYC received from CKYCR under CERSAI. If you have completed KYC with other leading partners you can see that also.

#2 Verify Identity 

The next step is verifying your identity. If you have already registered KYC, you will be asked the last four digits of your PAN card number. In case you opt for OTP based eKYC you need to provide your complete PAN card number and Aadhaar number. You will get OTP on your mobile for validation.

#3 Accept Terms and Conditions

On your KYC completion, you will see the loan agreement on the screen. You need to read the terms and condition and accept the agreement to complete the registration. The sanction limit will be user-specific and decided based on various factors including credit score. Once you accept the terms and conditions this facility will be active for you.

Benefits of using Amazon Pay Later Facility

Benefits details for using Amazon Pay Later facility are given below.

  • No credit card detail required in order to use this facility.
  • You need not to pay any additional money or processing fee to avail this facility.
  • You need to pay money later after 30 days.
  • The facility of converting this option into EMI is available.
  • No pre-closure fees applicable on this facility.
  • You will get online dashboard to keep track of expense and repayment.
  • Auto repayment facility is offered on the site.

Important Points to Note about Amazon Pay Later

  • The lender partner will decide the applicable limit for the individual based on the credit score and credit history.
  • This facility is available only for one eligible item at a time. This facility is not given for multiple items.
  • The maximum limit of lending money via this facility is limited to Rs.60000 per year. RBI has a mandatory guideline that financial institutions can lend up to the specified limit to the person who has done OTP based KYC.
  • The customer will get an EMI facility up to 12 months. The EMI plans are for 3 months, 6 months, 9 months, and 12 months.
  • If you opt for the EMI facility you need to pay the interest amount. The interest amount is not fixed and decided by the partner at the time of lending.

As per me, this facility is good only if you are opting for a pay later facility where you make payment after 30 days. If you opt for EMI you need to pay additional interest to avail of this facility.

For more information visit – Amazon Pay Later Help Section.

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