Happy New Year & Happy Investing ....

5 Key New Year resolutions for investors

Out of all the New Year resolutions people make, people seldom are able to adhere to it because either they are too hard to follow or just because they lose interest gradually. However, by just making a few simple and practical resolutions, not only can we be happy, but our money can be in the pink too. Read 5 key New Year resolutions for investors;

Physical and fiscal fitness is a must

If being fit and working out regularly is a part of your New Year resolution; then how about making your money work hard for you so your fiscal fitness too, is on point? By investing in Mutual Funds, you’ve already taken one step towards fiscal fitness but ensuring your money continues to remain fit is by maintaining your portfolio. It’s similar to losing weight, as it helps us to have a healthy body so we can function better, similar to cutting the tail of your portfolio that consists of either non-performing stocks or junk stocks that slow down the growth of your investments. 

Spend less, save enough and invest more

Every year, most people chalk down ‘Saving Money’ or ‘Spend Less’ as an important New Year resolution, however; that may not be enough on your quest to create wealth. Although, saving money is an integral part to avoid any sort of financial crisis but being a step ahead from the usual is necessary and that is to ‘Invest  More’. Rather than saving more money than usual, how about adding the surplus money to your investments? This will boost your Mutual Fund investments and help you achieve your financial goals faster. 

Its good to relax; for yourself and your investments

Begin this New Year by trying to take as little stress as possible. This implies on your investments too. When you make investments then don’t fret too much about it, come what may. Regardless of fluctuating market conditions or any other geographical or political turmoil, be relaxed and don’t give in to your whims and fancies or redeeming your investments. Give yourself some sleep and your investments some rest, for them to help you achieve your financial goals. Because, just like a human body which needs at least 7 to 8 hours of sleep for a fresh mind, your Mutual Fund investments too need at least a few years to reap benefits. 

Learn something new or something more

“To learn is to grow” is an old saying which can be thoroughly applied to your Mutual Fund investments as well. It’s good to develop a new hobby and pledge the same on your New Year resolution list, but it’s also good to frequently update yourself about various Mutual Fund schemes, different articles and blogs revolving around Mutual Fund investments so you can plan your financial goals better. 

Enjoy the small things in life

As a child, you may have done antics that now as an adult, would be great memories for you. Surely, you would have had a hearty laugh when you recall those. Sometimes in life, it’s the small memories in life that brings a smile and makes it worth the while. Similarly, in Mutual Fund investments too, the power of small can be reasoned through Systematic Investment Plan (SIP) in which, minimum investments can be made with Rs. 1000 with a feature of compounding  and Equity Linked Savings Scheme (ELSS) in which, minimum investments can be made with Rs. 500, with an additional advantage of ‘saving tax’. Isn’t it a delight that the power of ‘small’ can make a huge difference in your wealth creation journey? 

Interest Rates on a fall ,relook at fixed income- Debt Fund vs Fixed Deposit

Debt Funds are becoming an increasingly widespread rival to the hallowed FD. Here are their pros and cons vis-à-vis bank deposits

The bank deposit has been the instrument of choice of generations of low risk investors. However it is becoming harder and harder to ignore the challenge presented by debt funds. The two serve a similar function and are close rivals. The primary areas of difference are returns, safety, taxation, liquidity and returns with mutual funds holding the advantage in tax-adjusted returns and fixed deposits in safety.

Safety First
Bank Deposits are one of the safest avenues for savers in India with an almost negligible chance of default (although there have been instances of co-operative and local banks defaulting). As with all mutual funds, there are no guarantees in debt funds. Returns are market-linked and the investor is fully exposed to defaults or any other credit problems in the entities whose bonds are being invested in. However, that's a legalistic interpretation of the safety of your investments in mutual funds.

In practice, the fund industry is closely regulated and monitored by the regulator, Securities and Exchange Board of India (SEBI). Regulations put in place by SEBI keep tight reins on the risk profile of investments, on the concentration of risk that individual funds are facing, on how the investments are valued and on how closely the maturity profile hews to the fund's declared goals. In the past, these measures have proved to be highly effective and problems have been infrequent such as during the 2008 crisis and more recently with Amtek Auto and JSPL. Another common risk faced by debt funds is interest rate risk with funds losing value in a rising rate scenario and vice versa. Fixed Deposits which have been locked in for long tenures also face this risk in terms of opportunity cost but there is no actual loss of value when the deposit is held to maturity.

Taxation
The other big difference is that of taxation. Returns from bank fixed deposits are interest income and as such have to be added to your normal income. Since many investors are in the top (30 per cent) tax bracket, this takes away a large chunk of their returns. Banks also deduct TDS on interest income from fixed deposits. The tax rates are similar for debt funds held for less than 36 months (though TDS will not generally be deducted). However for debt funds held longer than 36 months, returns are classified as long term capital gains and are taxed at 20 per cent with indexation.

Liquidity
Turning to liquidity, open ended debt funds proceeds are credited within a period of 2-3 working days depending on factors such as whether an ECS mandate is registered. Fixed Deposits are also typically available at 1-2 day's notice, but usually carry a penalty if they are redeemed before the maturity date. Debt funds also have exit loads or charges that are usually levied for redemptions, typically upto 3 years. These exit loads are not applied to liquid funds with just a few exceptions for very short periods of time.

Returns
As the returns of debt funds demonstrate, you can beat the bank by investing in debt funds. Debt fund investors assume both credit risk (lending to riskier borrowers) and interest rate risk (the risk of bond prices falling when interest rates rise) and are hence compensated by higher returns.

In summary, you can beat the bank by investing in debt funds instead. However you should be cognizant of the risks involved and choose the right fund in order get the best possible deal.

Looking for a Regular Income-Start an SWP from Debt Mutual Funds

Although an SWP gives you regular income and saves on taxes in the long term, you cannot open an SWP on a scheme where you have an ongoing SIP

If you are planning to take a sabbatical from work or are retiring soon, you may be looking at different investment options that give a regular income. Usually, a lump sum is invested to get regular fixed amounts later. Popular products include post office monthly income scheme, Senior Citizens’ Savings Scheme and monthly income plans (MIPs). A lesser known option is the systematic withdrawal plan (SWP) in mutual funds. Recently, some funds have even removed the exit load on SWPs if you were to withdraw up to 15-20% in the first year, to encourage people who want to start investing in this instrument. Here is a look at what an SWP is.

WHAT IS SWP?

Many of us would be familiar with a systematic investment plan (SIP), where a corpus is accumulated by making regular investments into a mutual fund. SWP, in essence, is the reverse of an SIP, where you regularly withdraw a fixed amount of money from a lump sum invested in a fund, i.e., you instruct the asset management company (AMC) to redeem units on a predetermined date and credit a fixed sum into your bank account. Your fund’s value and number of units will reduce to the extent of each withdrawal. The amount to be withdrawn and the frequency— monthly, quarterly, half yearly, or annually—are set by the investor. Let’s say, you hold 25,000 units in a mutual fund scheme. You set up a monthly SWP for Rs.10,000. In the first month, if the net asset value (NAV) of the fund was Rs.25, then, 400 units (10,000/25) will be redeemed from your holding and Rs.10,000 will be transferred to you. You will now hold 24,600 units. In the second month, if the NAV was Rs.26, then 384.62 units will be redeemed, your outstanding units in the fund will reduce to that extent, and Rs.10,000 will be paid to you. This process will continue as long as you run the SWP or till you have completely redeemed your holdings.

Other options such as MIPs that pay dividends do not pay a fixed amount as these are based on the funds’ performance.

For an SWP, the tax treatment of each withdrawal will be the same as in the case of full withdrawal of equity and debt funds. Hence, for units where the period of holding has not crossed 12 months for equity funds, short-term capital gains tax will apply. For debt funds, short-term capital gains tax applies if units are held less than 36 months, and long-term capital gains tax if held for longer.

THINGS TO REMEMBER

Although an SWP gives you regular income and saves on taxes in the long term, you cannot open an SWP on a scheme where you have an ongoing SIP. Also, fluctuations in returns can hit your investment and SWP. In a falling market, an SWP can eat into your principal. But some financial planners recommend SWP in balanced funds as typically these are less volatile than pure equity funds.

You also need to be mindful of the fact that the fund’s exit load may also apply to the SWP. It can be in the range of 0.25-2%, if applicable and depending upon holding period.

Bank FD Vs. Debt Mutual Fund

You must be listening all around by family members, friends, agents etc to invest in mutual fund. In case you are not convinced & are happy to park your money in bank fixed deposit, have a look at Debt Mutual Fund, which are far less risky as compared to Equity Mutual Fund & Taxation of interest part is almost zero after 3 years due to indexation effect.

MY TAKE: In case your time horizon is greater than 5 years, go for Equity Mutual Fund through SIP mode, else have a look at Debt Mutual Fund.

DEBT MUTUAL FUND

1. Invest in government securities, corporate bonds etc.

2. No TDS

3. Due to indexation effect, Capital gains are almost Tax Free in case you hold it for three years.

4. Capital appreciation is somewhat similar to bank FDs.

Debt MF Vs Bank FDs.

Say a person deposited Rs.1,00,000 in bank fixed deposit on 31^st March 2012. Interest rate be 9% for the said period. Assuming that no TDS will be deducted, final amount at maturity (after 3 years) as on 1^st April 2015 would be Rs.1,29,502.9

Total interest at the end of 3 years will be Rs.29,502.9 (1,29502.9 – 1,00,000)

Hold on !!!...Rs.29,502.9 is not the net profit. How can you forget TAX !!!!

Taxation of FDs

Note: Interest from bank FDs is added to your income & taxed accordingly

NO	PROFIT BEFORE TAX	TAX BRACKET	PROFIT AFTER TAX
1.	29502.9	10.3%	26464.1
2.	29502.9	20.6%	23425.3
3.	29502.9	30.9%	20386.5

Taxation of Debt Mutual Fund

If the same Rs.1,00,000 was deposited in Debt Mutual fund with 3 years time horizon. Assuming the same 9% capital appreciation, amount accumulated at the end of 3 years will be Rs.1,29,502.9.(Similar to bank FDs)

Buying Price	100000
Selling Price	1,29,502.9
CII 2011-12	785
CII 2014-15	1024
Index Purchase Price	(1024/785)*1,00,000 = Rs.1,30,445.9
Indexed Profit	Selling Price – Indexed Purchase Price 1,29,502.9 – 1,30,445.9 = Rs.(-943)

Due to indexation effect, profit comes out to be negative. So there is no point of paying tax on capital gain. So in case you fall in 30% Tax bracket, clearly there is a gain of Rs.9,116.4 in case you invest in Debt Mutual Fund instead of bank fixed deposit.

So why to pay tax on your bank FDs interest. Explore the world of Debt Mutual Fund.

In case your time horizon is greater than 3 years, you can also look for fund with 10-20% equity exposure to give a boost to your overall portfolio.

Note: Kindly consult your Financial Advisor before investing in Mutual Fund

Disclaimer: "Omiga Wealth Solutionz" is into distribution of Mutual Fund.

Top Reasons why financial planning is important...

Financial planning helps you determine your short and long-term financial goals and create a balanced plan to meet those goals.

Here are powerful reasons why financial planning – with the help of an expert financial advisor – will get you where you want to be.

1. Income: It's possible to manage income more effectively through planning. Managing income helps you understand how much money you'll need for tax payments, other monthly expenditures and savings.


2. Cash Flow: Increase cash flows by carefully monitoring your spending patterns and expenses. Tax planning, prudent spending and careful budgeting will help you keep more of your hard earned cash.


3. Capital: An increase in cash flow, can lead to an increase in capital. Allowing you to consider investments to improve your overall financial well-being.


4. Family Security: Providing for your family's financial security is an important part of the financial planning process. Having the proper insurance coverage and policies in place can provide peace of mind for you and your loved ones.


5. Investment: A proper financial plan considers your personal circumstances, objectives and risk tolerance. It acts as a guide in helping choose the right types of investments to fit your needs, personality, and goals.


6. Standard of Living: The savings created from good planning can prove beneficial in difficult times. For example, you can make sure there is enough insurance coverage to replace any lost income should a family bread winner become unable to work.


7. Financial Understanding: Better financial understanding can be achieved when measurable financial goals are set, the effects of decisions understood, and results reviewed. Giving you a whole new approach to your budget and improving control over your financial lifestyle.


8. Assets: A nice 'cushion' in the form of assets is desirable. But many assets come with liabilities attached. So, it becomes important to determine the real value of an asset. The knowledge of settling or canceling the liabilities, comes with the understanding of your finances. The overall process helps build assets that don't become a burden in the future.


9. Savings: It used to be called saving for a rainy day. But sudden financial changes can still throw you off track. It is good to have some investments with high liquidity. These investments can be utilized in times of emergency or for educational purposes.


10. Ongoing Advice: Establishing a relationship with a financial advisor you can trust is critical to achieving your goals. Your financial advisor will meet with you to assess your current financial circumstances and develop a comprehensive plan customized for you.

The first step in developing your financial plan is to meet with an advisor. At "OMIGA WEALTH SOLUTIONZ" we use our unique discovery and assessment process called LIVEDREAMS. This complimentary process begins with a review of your current financial circumstances, anticipated changes, future goals, and results in your customized plan. Call us today to book your assessment.

#GettingRich –How to be a #crorepati by1 paisa?

What do you think it takes to getting rich?

Lottery!

What do you think it takes to getting rich in 31 days?

Convinced – It can only be the Lottery!

No, not really. You need something better.

Here’s a challenge for you. We give you 1 paisa, yes just 1 paisa.

If you double the money every day for 31 days, what will be the final value?

Come on, take a shot. You can use an excel sheet or a calculator if you want. Give it a try before you move forward. 

Well, to give a visual impression of the idea, here is a chart plotted with the values with the days. If you start with 1 paisa on Day 1 then on Day 31 you will have…

At the end of 31 days, you will have Rs. 1.07 crores.

Unbelievable!

All you did was double the money every day. Something like this –

Day 1 – Rs. 0.01

Day 2 – Rs. 0.02

Day 3 –  Rs. 0.04

Day 10 – Rs. 5.12

Day 20 – Rs. 5,242.99

Day 25 – Rs. 1.67 lacs

Day 31 – 1.07 crores

You don’t want to trust this. But that’s how it is.

The formula for getting rich

All you do is double your money. This sounds so simple. But it hasn’t been easy. Getting rich isn’t easy.

There is tremendous short term pain. As you can see in the chart above, for the first 25 days out of 31, absolutely nothing seems to move. That’s 81% of the time.

This time period constitutes the “great age of boredom“.

That’s where most investors give up. It needs lots of patience and discipline to go through this phase.

But you stick on and see how the magic works. You see the first lac only on Day 21. Starting day 26, the movement becomes visible on the chart. And in the next 5 days, we have a skyscraper coming up leading all the way to over Rs. 1 crore.

While patience and discipline is required in the journey of “getting rich” journey, another important lesson for us is to Start early.

Look at it this way. Suppose you start with Rs. 1,000 at age 21.

Can you double it every year? How? By using a combination of investment returns as well higher savings.

You know what will be the result?

At age 51, you will have Rs. 107 crores.  

It does sound like a fairy tale. In reality, money is unlikely to double every day. But we hope the lesson is not lost.

It is not just the tricks of the trade or chasing some moonshot that you need to be rich. Discipline, patience and willingness to go the whole hog is what will actually make you rich.

All the best!!!!!

Made Or Lost Money in Mutual Funds !!!....

And they say, "We lost money in Mutual Fund" 

This article is dedicated to all those people who complain about losing money in Mutual Funds.  Article will also turn out to be useful for those who are skeptical about investing in Mutual Funds.

Many a time people say that investing in Mutual Fund  is too risky & they lost huge amount of money. This is what they must have done:

# Invested a lump sum amount

# Invested for a very short duration (Less than 5 years) or must have withdrawn the money when the market was falling.

# Invested in a theme like infra etc.

Now let’s have a look at what actually happened over the past fifteen years.

The table shows how investing Rs.1,000 per month systematically (SIP) over a period of time grew to a large corpus.

ICICI TOP 100 Fund

Year	Tenure	Amount Invested	Present Value	Rate %
2013-14	1	12000	16674	55.19
2012-14	2	24000	34917	34.06
2011-14	3	36000	54994	26.23
2010-14	4	48000	74706	20.65
2009-14	5	60000	99600	19.01
2008-14	6	72000	130839	18.68
2007-14	7	84000	154781	16.34
2006-14	8	96000	185670	15.38
2005-14	9	108000	233236	15.88
2004-14	10	120000	304269	17.14
2003-14	11	132000	402685	18.51
2002-14	12	144000	540921	19.92
2001-14	13	156000	688258	20.42
2000-14	14	168000	803079	19.84
1999-14	15	180000	941493	19.44

# ICICI Large cap is just taken for illustration purpose. You can choose the fund according to your risk appetite.

Note:

# Investment Tenure: 1^st April of each year to 1^st March 2014

# Value as on 9^th June 2014

# Fixed amount is invested per month (SIP)

A person who had invested Rs. 1,000 per month in ICICI TOP 100 fund systematically from 1^st April 1999 to 1st March 2014 (15 years), accumulated Rs.9,41,493 as on 9^th June 2014.

Mutual Funds Vs Bank/Post office Recurring Deposit

If the same Rs.1,000 was invested per month in some Post office or bank recurring deposit for 15 years, amount accumulated would be Rs.4,20,000 (Considering a flat 10% rate over the past 15 years). Clearly a huge difference of Rs.5,21,493.

Note: Interest accumulated is tax free in Mutual Funds whereas it’s taxable in Recurring deposit.

Things to be kept in mind before investing in Mutual Funds:

# Set a goal 1^st and then invest. Goal can be you retirement, child higher education etc.

# Invest a small amount but invest systematically & regularly. Do not track the market. Eventually the market will come up

# Invest in a combination of large caps & mid cap funds

Remember, it’s not about timing in the market. It’s all about how much time you invest in the market.

*Returns from mid cap are much higher than large cap during the past few years. One should choose the funds according to the risk appetite.

Disclaimer: "Omiga Wealth Solutionz" is into distribution of Mutual Funds"

Is it possible to Building a fortune-Rs.100 crores!

  Building a fortune-Rs.100 crores!

You all have goals and you’re investing towards the same.

Other than your goals like retirement, child’s higher education etc.; have a goal of creating huge wealth in next 20 years.

We’ve seen through various examples how many funds have multiplied wealth by 40 times to 100 times during last 20 years.

We believe that equity funds would be able to provide 18% returns over next 2 decades; this means your wealth can multiply by 27 times in next 20 years.

At 18% annualised returns, every Rs.10,000 you invest per month, would be worth more than Rs.2 crores after 20 years.

Those of you who are investing for 5 years or more, regularly through SIPs, have already started experiencing the power of compounding and equity.

Those of you who have accumulated Rs.1 crore so far and doing a SIP of Rs.1 lakh per month (through equity funds), can expect to be worth around Rs.60 crores in next 20 years. That is USD 10 million in 20 years. You would be in top 1% of not only India’s population but the world population itself.

If you’ve Rs.50 lakhs invested in equity MF so far and is doing a SIP of Rs.50,000 per month, the value after 20 years would be Rs. 30 crores. With USD 5 million, you would also be in the cream of world population, top 1%.

The above numbers are arrived with the assumption of 18% annualised returns.

Someone who has Rs.2 crores in equity funds asked me how much he needs to save every month to achieve Rs.100 crore in 20 years; assuming 18% annualised returns. Roughly the amount works out to Rs.1.23 lakhs per month.

He asked how much that Rs.100 crore is worth today? Assuming a long term inflation rate of 6%, it is worth Rs.31 crores today. This means what you can buy with Rs.31 crores today; you can buy the same with Rs.100 crores 20 years down the line.

He was stunned by the power of equity, power of time and power of compounding. He has started investing Rs.1.5 lakhs every month.

As India moves from a low income per capita to a middle income per capita country, as we move from a $2 trillion to $20 trillion economy, over next 2 decades, with nominal GDP (real GDP + inflation) growth rate of around 15%, 18% annualized returns from stock market (equity funds) look very much possible.

As you are aware, stock market growth happens in spurts with a high degree of volatility. In bear markets, even a diversified equity fund falling by 40% or so is not uncommon.

You’re reaping rewards now for sitting tight in one bear market. Even in a secular growth country like India, we’ll go through couple of bull and bear cycles in next 2 decades. If you can sustain the temperament and the patience you’ve developed in last few years for next 2 decades, huge fortune is all yours.

The most difficult part of investing is staying the course for long run without worrying what is happening in the markets. If you can develop the right temperament to stay the course for long; you can build a great fortune from the markets- be it Rs.30 crores or Rs.60 crores or even Rs.100 crores.

Our family has achieved financial independence by following what we are repeatedly sharing with you. By teaching you, I learn and my conviction becomes stronger. I’m absolutely convinced that if one can master his behaviour, huge fortune can be made through markets over long run. Time and discipline is the key.

Our key focus and main job is to ensure that you invest regularly over long run and stay the course without break. Everything else is secondary. The daily sms, blogs or tweets are all aimed towards this purpose. As Munger says, repetition is the heart of instruction and we would repeat tirelessly for both your and our benefit.

Have a big goal, invest towards it regularly, give long time for compounding, stay the course and build a big fortune.

BEST INVESTMENT STRATEGY-One kick 10,000 times

          One kick 10,000 times

“I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.” -Bruce Lee

This quote talks about power of practice, perseverance and repetition.

It is said that 10,000 hours of practice makes one an expert in a particular field. Practicing one kick 10,000 times makes one a master, an opponent to be feared by even by the likes of Bruce Lee.

By doing one thing, 120 times or 240 times, you also become a successful investor. That one thing is SIP. SIP over 10 (120 times) or 20 years (240 times) brings investment success.

Studies have found that only 5% of investors do better than an index fund. For remaining 95%, it is a losing game. Since actively managed funds (the kind of funds you are investing) do well in India, by investing regularly in them for long term, you beat most other investors including professionals.

We’ve mentioned about Dalbar studies which quantifies how investors earn significantly lesser than investment returns. 95% may fall into the category of investors who earn significantly lesser than investment returns. Only 5% may make it.

Those 5% are the ones who practice one kick, 10,000 times; who follow one habit of SIP regularly without fail, 240 times.

There is no need to learn 10,000 different things like analysing macro economics, geo political factors, technical analysis, quant theories etc. 

Practise just one thing, only one thing, do SIP regularly without breaking even one instalment for next 20 years. This one thing would make you successful and respected by the Bruce Lees of the investment world.

One kick, 10000 times = Successful martial artist

One method(SIP),20 years=Successful investor

All the best.

Become rich, achieve financial freedom & fulfill your dreams...

Work hard, party harder but before saving a little(15-20%) of your earning

Being in your 20s, for some, means “Work Hard, Party Hard”. For the vast majority of young urban professionals who have just started their careers, it is actually a lot more of working hard rather than partying hard.

Salaries tend to be limited at this age. Saving is difficult considering the many distractions provided by life in a big city. For the limited saving that the young have access to, deciding the best place to invest that money can be a challenging question.

“Do I go for higher risk equity or lower risk debt/FD type instruments?” Questions such as these are common. Take for instance, my friend Navin who after completing his graduation landed a job with a prestigious MNC. 

As a financial advisor, I need to consider the reality of Navin’s financial situation more than what product to consider. Navin is making enough to take care of his expenses and saves Rs. 5000 to Rs. 8000 each month. 

Other than what he saves each month, he doesn’t have any bulk savings. This lack of any significant financial backing means that building a short term corpus should be his top priority. 

This short term corpus can’t be exposed to high volatility/high risk investments like equity.

This leaves either Fixed Deposits or Short term Debt Funds as the best option for Navin. Debt funds are an arguably useful investment avenue for young professionals just starting with their careers. 

Here are five reasons that explain why.

# 1.  Amateurish investment pattern – Navin was new to his job and as such had a limited income. He, nevertheless, wants to own the new iPhone 6 and buy a laptop. His savings were limited and he was not sure of the regularity of his investments.

The debt fund serves as a good avenue for starting off his amateur investments to learn about his income, the related expenditure, and the corresponding saving pattern.

#2. Easy liquidity – The prime area where debt mutual funds score is their inherent liquidity. One can withdraw from the fund anytime, therefore it is an investment avenue which can be used as per the investor’s withdrawal wishes. Someone such as Navin could save for his higher education (he was keen on a MBA degree), plan his wedding or even invest the lump sum elsewhere.

#3. Growth – Though a savings account also provides liquidity, the rate of interest is low (4% per annum). The debt mutual fund, besides providing liquidity, would also provide a low risk return of around 8%.

If held for more than 3 years this investment also becomes tax efficient as indexation can be applied to the investment. This will be important as in three years the increase in salary also increases potential tax liability. This feature makes it a better alternative than fixed deposits.

#4. Emergency Fund – Having a fund ready for unforeseen purposes is a wise idea. The young lean towards spending rather than investing. As such, creating a separate emergency fund becomes a difficult endeavor. The debt fund would serve as a saving corpus which can come in handy in times of a crisis.

If you are a 20 something individual, you must be raring to go to great heights in your life and build a strong financial portfolio but you would need to start somewhere relatively safe, and a debt fund is your answer.