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Start Saving – 6 easy steps to saving big
Posted by Admin on Mar 25, 2011
in General

Many of us have been planning to start saving and building a portfolio but find it very hard to save with so many expenses in hand. But it's amazing how easy it can be to squeeze some extra cash out of your budget - if you know how.


As a famous philosopher once said, the longest journey begins with but a single step. So here's how to get motivated, and start achieving that savings goal.




First, work out your budget. Take a look at your last few bank statements and enter all of your income (salary, benefits etc.) in one column, and all of your expenses (rent, bills, insurance premiums, childcare fees, travel costs, entertainment, food etc.) in another.  


It’s easier to do than you imagine – you can collect your bills and total them up and fill the details in an excel. By subtracting your expenses from your income you'll see how much money you have left over each month to save.


Cut your expenses


Now you may be looking at a pretty paltry sum, in which case there are many ways to boost it. But be warned - you'll have to really want to economise to make decent savings.


First, pare down your bills. Cancelling subscriptions to the gym (you never go), extra dinner and lunches in restaurants (which you have been thinking of cutting down) or any other luxuries can save thousands per month and could be more cheaply replaced with a daily run around the local park and nice home-made healthy meal with friends. Likewise, finding telephone and broadband deals can boost those coffers greatly.


Next you need to reduce those living expenses. Work out where your money goes (your statement and a spending diary can help).


Some smart ways to cut your expenses:

-       Write a menu for the week and only buy what you need from the supermarket – do not get tempted by the extras that the supermarkets display to tempt the buyers. Strictly Stay away from them.

-       Find the best deals on your mobile phone to cut down the extra costs.

-       And of course, bringing lunch to work will save a fortune compared to spending Rs 200+ each day.


Be realistic


But while you need to cut back, don't go crazy. The main reason budgets fail is because many of us get over-excited when compiling them and leave ourselves with ridiculously meagre sums to survive on. Allocate a reasonable budget for food and necessities and allow yourself a few small luxuries each month - you'll be far more likely to be able to stick to this long term.

You should now have an idea of how much you need to live on each month - and how much you'll have left over to save.


Start saving


Now it's time to find a home for those savings and watch them grow. As much as it is important to save, it is also important that the money you save is deposited where you earn the maximum yield with minimum tax. Else you will start losing the value of your savings. Our recommendations:


-       Ultra short term plans of mutual funds are a great place to park your savings. They offer better rate of interest than a Bank Savings Account and are even more tax efficient.

-       If you are saving for the long term, then you might considering putting the amount in a 5-year fixed deposit offered by banks which will also provide you the tax benefit under IT Section 80C.


How to save more


But could you save more?


Sell: Have you got a house full of books, CDs, DVDs, computer games, toys, or gym equipment you never use? Then sell it and make a few thousands and create extra room in your house. You can sell your un-required items at Its easy to register and start selling your items.


Car sharing or car pooling can almost halve your petrol bill (not to mention reduce wear and tear on your vehicle). Find three other like-minded souls and you could free up hundreds each month. You can also car-pool with your office colleagues to save up on costs.


Frequent Flyer Membership: Enrolling to the frequent flyer program of airline like Jetairways and Kingfisher could save you thousands each year by earning miles which you can use to buy tickets. You can earn extra miles not only when you fly and by using their e-ticketing services (500 extra miles) and web check-in service (250 extra miles) but also when you stay in hotel, use mobile service, rent-a-car service or use any of their other partner’s service. In addition, frequent flyer members also get discounts round-the-year at many restaurants, stores and other services which the program has tie-ups with.


Online Shopping: If you shop online, you can check prices at,,, and find the best deal for your electronics, home appliances, kitchen items, apparels, home décor and many more. Online stores offer very good deals, which can help you cut down your costs drastically.


Discount Vouchers and Deals: Cut down on your entertainment and health and beauty care bills by checking out the discount vouchers and deals available through websites like, or or you get through  various membership programs you are registered with.


But beware of indulging in purchases of items you don’t need. Online shopping can be addictive.


Spend wisely


And of course, the time will come that you'll need to spend some money. But could you borrow the required item from a friend/relative?


When you have to go out, try to find good deals available through discount vouchers or memberships (airline frequent flyer program, shopper stop membership, etc). Whenever you spend just make sure you have given a thought to where your money is going and is there a better way to spend this money.


If you're careful, but realistic, you should be able to save a surprising amount of money.



This article has been inspired and partially sourced from the article Six Steps tp Big Savings on with changes made in Indian context.

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Monthly Income Plans Demystified
Posted by Shruti Jain on Nov 15, 2010
in Mutual Funds

In recent years, monthly income plans of mutual funds have become quite popular with the investors for their safety with some exposure towards equity for higher returns. While MIP is a smart investment avenue for conservative investors, as it aims at providing reasonable returns with limited risks, it is important for investors to not be misled by its name: Monthly Income Plan.


Investors often look for investment avenues that would offer them regular and high returns. Monthly Income Plans (MIP) of mutual funds is their answer. A MIP is a hybrid investment avenue offered by the mutual funds that invests a small portion of its portfolio, around 5-25 per cent, in equity and the balance in debt and money market instruments. The equity component acts as a catalyst that helps the fund generate that extra return. MIPs provide regular income to investors, but the periodicity depends upon the option you choose. These are generally monthly, quarterly, half-yearly and annual options. A growth option is also available, where you do not receive regular dividends, but gain in the form of capital appreciation.


A MIP is best suited for investors with a conservative risk profile who want to take exposure in equity but don’t really have the stomach for it. MIPs also appeal to investors in the higher tax bracket as these schemes offer better post-tax returns compared to other investment options such as fixed deposits.


MIPs offer flexibility to invest across asset classes and hence can offer great value to an investor’s portfolio. A MIP typically invests in equity and debt instruments, however new products like Religare MIP Plus or Taurus MIP Advantage have some allocation of their portfolio towards Gold.


With MIPs, in periods where the broader market is down, investors will be happy to see that their investment base has not been damaged as badly as someone else who is fully invested in equities, because of the high debt component they come with. So for example, in a volatile equity market, an MIP would increase its debt holding to contain downside risks and generate decent returns. While in a scenario of declining debt returns, the small dose of equity would provide some boost to the overall performance of the fund; hence giving investors best of both the worlds.


Why MIP?

  1.           Safety: with high exposure in debt, an investor can rest assured that the money invested would not be susceptible to volatility and would generate consistent returns.
  2.           Higher returns: they offer returns higher than a fixed deposit or bonds, because of the kick provided by the equity exposure.
  3.          Tax efficiency: Dividends declared under MIPs are tax-free. Income from bank fixed deposits is taxable as “income from other sources” and is taxed depending on the tax bracket of the individual. Further, if the interest income exceeds Rs 5,000 in a financial year, then TDS is applicable, which is so not the case in a MIP.
  4.          They offer active management of debt-equity (in some cases gold) allocation
  5.          Liquidity: MIPs score high on liquidity parameter, as you can easily redeem your fund at the market price anytime you need cash.



Investors must take care of a few things before they decide to invest in a MIP:

1.    Returns are not assured

The name Monthly Income Plan can be deceptive because MIPs do not offer assured returns. They are market-linked products and declaration of dividend is subject to the availability of distributable surplus.


A MIP typically aims at providing regular income (not necessarily monthly, as the name suggests) to the unit holder, usually by way of dividend. The return of an MIP is dependent on the performance of the stock markets, economy and corporate sector. There are no guaranteed returns in a MIP, owing to its equity component. At the same time, the equity component of the fund could make all the difference. Positive momentum in equity markets would significantly boost the returns MIPs, but that may not always be the case.


2.    Regular Dividend may not always be a good thing

Often investors consider a MIP plan based on its dividend record, as they correlate the dividends declared with the fund’s performance. Hence, a fund distributing regular dividend is considered a good buy. However, this need not always hold true. Though MIPs that perform well are expected to declare dividends regularly, there can be occasions when even the opposite holds true.


Many a times, fund houses declare dividends to attract investor’s attention, to maintain a consistent dividend paying track record, despite testing market conditions. The dividend track record can also be flaunted as a sales pitch to attract investors to the fund. On the other hand, there could be funds that choose to use that surplus money to invest at attractive valuations and skip dividends to improve the performance of their fund.


So while dividend history must be considered when selecting a MIP, it should not be the sole basis of your investment decision.


3.    Check Portfolio Composition

It is important that an investor checks the portfolio composition of the scheme before investing in the plan.


Usually, MIPs offer an equity component ranging from 5-25 per cent. While a higher equity component can aid the fund in offering higher returns, the same can also enhance the MIP's risk profile. Hence, it is important that you only choose the scheme that matches your risk profile and not get misguided by the higher return.


An MIP is a pre-dominantly debt offering, hence the debt portfolio's composition would have a significant impact on the fund's performance. The choice of the debt selection depends on a lot of factors including interest rate scenario, credit rating and maturity. A debt portfolio bearing low credit rating may be able to generate better returns, but it comes with a higher risk. Moreover, changing interest rate scenario would require different instrument like a floating rate fund, however when the rates are expected to decline, a fixed rate would work best to lock-in the higher interest.


Thus review the portfolio carefully before zeroing-in on the MIP plan you would invest-in.


To invest in MIP or for more details, email:

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Investng in Gold - The ETF Way
Posted by Shruti Jain on Nov 01, 2010
in Mutual Funds

Gold has been one of the most popular investment avenues because of its unique blend of near indestructibility, beauty, rarity and because of its status as a means of exchange and universal currency par excellence for centuries.


Throughout history, perhaps no other asset in the world has had the universal appeal of gold For centuries, nations have sought to possess gold as a medium of international exchange, as a store of wealth and in order to increase and preserve power while individuals have used gold as a store of wealth and as insurance against the fluctuations and depreciation of paper money and to protect against other macroeconomic and geopolitical risks.


The precious metal has yet again proved to be a valuable winner for investors in recent years due to the very significant macroeconomic, geopolitical, monetary and systemic risk facing our modern global financial system and economy. Addressing an Assocham function in Mumbai, Assocham President Venugopal Dhoot said, “since disposable incomes of average Indians have gone up significantly, gold has become a preferred choice of investment for a large number of investors”.


Diversify your portfolio with gold


Gold is undoubtedly the world’s ultimate safe haven - and the metal has stood the test of time in a way that no paper currencies ever have. Rising demand, coupled with shrinking production, means that prices over the long term have to rise as well.


We all know successful investing entails maintaining a healthy diversified portfolio that includes a wide range of assets including equities, debt, property, a cash component and allocation to gold related investments and gold bullion.


So how much of my portfolio should I hold in gold?


Even a small weighting of gold in an investment portfolio can help to reduce overall risk as gold acts as a natural hedge and is uncorrelated with other asset classes. A good rule of thumb is to have atleast 10-15 per cent allocation of your portfolio towards gold and related-gold instruments.


So how can I invest in Gold?


Now the big question that comes to one's mind is how to invest in gold, considering that today an individual or corporate has the option of buying gold through various routes, and deciding which route to choose can be quite daunting. Broadly, an Indian investor can invest in gold through any of the following channels:

Physical Gold/Jewelry – through bank or jeweler

Commodity Exchange – open an account in commodity segment and buy in demat or physical form

Exchange Traded Funds (ETFs) – through your stock trading account 


The mode of buying or investing in gold would depend on your need. If you want to speculate or trade in gold, and gain from price volatility, then buying gold through commodity exchange would be best suited for you. If you goal is to make jewelry, then buying gold through a jeweler or a bank in physical form would be more suited for your need. However, if you are looking to buy gold for investment purpose or maybe investment now but use it later for your child’s marriage, then buying gold through an ETF makes more sense.


Given below is a comparison of buying gold through different channels.




Commodity Exchange

Gold ETF

Purchase Price

At a premium

At a premium

Close to market price (but brokerage cost involved)

Close to market price

Risk of impurity

High – comes in varied carats

Very Low




Buy-back at a discount

Banks do not buyback, hence uneconomical

On the exchange, close to current market price (demat). If delivery is taken then uneconomical

On the exchange, close to current market price






Transparency in pricing and quality



Very High

Very High

Mode of holding





Risk of theft






Standardised. Lower denominations uneconomical due to high making charges

Standardised. Lower denominations uneconomical due to high making charges

Different lot size, minimum 10 grams

Minimum of 1 unit (1 gram of gold) and in multiple thereof. No making charges

Wealth Tax






What are Gold ETFs?


Gold ETFs are open-ended mutual fund schemes that will invest the money collected from investors in standard gold bullion. Being ETFs, these funds are listed and traded on the stock exchange i.e. investors can buy and sell them like any other stock on the stock exchange, on a real- time basis. These are passively managed funds and are designed to provide returns that would closely track the returns from physical gold in the spot market.


Gold ETFs are listed and traded on NSE and/or BSE. They are held in demat form just like the stocks. To invest in Gold ETF, you need to have a trading and demat account with a stock broker.


What are the charges involved in buying gold through ETF mode?


An investor has to pay brokerage, demat and trading account charges and expenses to the fund house for buying and investing in gold ETF.


Why Gold ETF’s?


-  Investment even with small amounts is possible: Gold ETFs allow investment in gold even in small denominations, which makes it easier for the retail investor to participate.

Convenient and hassle-free: Investing in gold ETFs will give the investor all the advantages of investing in gold while eliminating drawbacks of physical gold -- cost of storage, liquidity and purity of gold.

More Tax Efficient: Investing in paper gold gives investor’s tax advantages over investing in physical gold. Firstly, gold ETFs are not liable for wealth tax, unlike physical gold. Secondly, gold ETF units held for more than one year qualify for long-term capital gains at 20%, whereas the holding period in physical form has to be three years to qualify for long-term capital gains. For less than three years, the gains are taxed at 30%.


Taxation – Gold: Physical vs. Commodity Exchange vs. ETF

Physical Gold

Commodity Exchange


Wealth tax



Not applicable

Long term investment


Speculation or Trading


Short term capital gain tax

Applicable if sold within 3 years from purchase

Gains are not categorized as short term. Purchase/sale without delivery is treated as speculative gain/loss. If delivery is taken, it is categorized as income/loss from business and taxed accordingly

Applicable if sold within 1 year from purchase

Long term capital gain tax

After 3 years


After 1 year


What should investors do?


Gold ETFs offer investors a convenient means to invest in gold without the hassles of storage; also it spares investors of the concerns regarding the quality of gold. Gold ETFs would probably be appropriate for investors who wish to invest in gold in bulk and are likely to be faced with a storage problem. Stability, reduced volatility in a well-diversified portfolio, hedge against inflation, convenient investment vehicle to get tax-efficient exposure due to the absence of wealth tax and long-term capital gains tax, are all good reasons to invest in gold ETFs.


Gold will also help you to diversify your portfolio – remember ‘Do not put all your eggs in one basket’.


Which are the currently available Gold ETFs in India?


Name of the Scheme

NSE Code


Gold Benchmark Exchange Traded Fund


March 2008

UTI Gold Exchange Traded Fund


January 2007

Kotak Gold Exchange Traded Fund


June 2007

Reliance Gold Exchange Traded Fund


November 2007

Quantum Gold Exchange Traded Fund


February 2008

SBI Gold Exchange Traded Fund


March 2009

Religare Gold Exchange Traded Fund


January 2010

ICICI Prudential Gold Exchange Traded Fund


July 2010

HDFC Gold Exchange Traded Fund


June 2010



Our Verdict


As an investment option in gold, gold ETFs are more convenient and hassle-free than physical gold or commodity. Besides, investors are freed from the headache of worrying about the quality, safety, transparency in price and resale value. Moreover, investors looking to put in small amount in gold will also find gold ETF better, as one can buy as low as 1 gram of gold through the ETF way. From tax perspective too, Gold ETFs are attractive.


To Invest

SMS:  <Arihant Gold> to 56677


Tel: (0)9320045030


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Welcome to Arihant's Investment Blog
Posted by Administrator on Oct 22, 2010
in General

Arihant Capital Markets Ltd has created this Blog: 

- to address the need of investors, 

- to ensure that they get the right investment advice,

- to offer them a platform to share their views on various investment related topics and 

- to get their queries addressed.


Through this blog, we aim to reach out to millions of investors and provide objective information on various investment related topics like equities, mutual funds, bonds, details of new investment products in the market, stock markets, personal finance and more.


We hope you will enjoy this blog and will actively participate through your comments.


In case you will have any queries regarding any of the posts or want to suggest us the topics to be addressed on this blog, please feel free to email us at:


Happy Investing!!!!


Kind Regards

Team Arihant Capital Markets Ltd 

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