ENTRY LOAD AND EXIT LOAD

Mutual fund companies collect an amount from investors when they join or leave a scheme.
This fee is generally referred to as a 'load'. Entry load can be said to be the amount of fee
charged from an investor while entering a scheme or joining the company as an investor. Exit
load is a fee or an amount charged from an investor for exiting or leaving a scheme or the
company as an investor.

Generally, an entry load is collected to cover costs of distribution by the company. Different
mutual funds houses charge different fees as an entry load. In India, this charge was usually
about 2.25% of the value of the investment. From August 2009, however, SEBI has done
away with this practice of charging entry load for mutual funds.

The aim behind the collection of this exit load at the time investors exit the scheme is to
discourage them from doing so, i.e. to reduce the number of withdrawals by the investors from
the schemes of mutual funds. Different mutual funds houses charge different fees as an exit
load.

What Are Exit Loads in Mutual Funds?

The exit fee is usually a percentage of the Net Asset Value (NAV) of the mutual fund units
held by investors. Once the AMC deducts the exit load from the total NAV, the remaining
amount gets credited to the investor’s account.

For instance, if the exit charges for a one-year scheme are 2% and you redeem within six
months, then this would be much before the agreed investment period. If the NAV of the fund
is Rs.35 during the time of redemption, then the exit fee would be 2% of Rs.35, which
amounts to Rs.0.7. The remaining amount, Rs.34.30 gets credited to the investor. If the
investor completes the agreed fund tenure, then he/she will not be charged the exit load at the
time of redemption.

How is Exit Load Calculated?

Exit Load or Exit Fee is a percentage of the Net Asset Value (NAV) of the mutual fund. The
amount that is left after deducting the Exit Load from the Net Asset Value of the units
redeemed is credited to the investor’s account.

1) Exit load of 20 schemes

Schem Exit
es load
1 Mirae Asset Emerging Bluechip Fund 1%
2 SBI Small Cap Fund 1%
3 Canara Robeco Emerging Equities Fund 1%
4 Nippon India Small Cap Fund 1%
5 Kotak Emerging Equity Fund 1%
6 ICICI Prudential All Seasons Bond Fund 0.25%
7 Franklin India Dynamic Accrual 3%
8 SBI Magnum Medium Duration Fund 1.5%
9 Axis Strategic Bond Fund 1%
10 PGIM India Dynamic Bond 1%
11 HDFC Hybrid Equity Fund 1%
12 Aditya Birla Sun Life Balanced Advantage Fund 1%
13 ICICI Prudential Equity & Debt Fund 1%
14 Kotak Asset Allocator Fund 1%
15 ICICI Prudential Balanced Advantage 1%
16 Indiabulls short term fund NIL
17 PGIM India Mutual Fund NIL
18 hdfc midcap opportunities fund 1%
19 Essel Large Cap Equity Fund Direct - Growth 1%
20 Principal cash management fund NIL

From the table:

-Highest exit load scheme is Franklin India Dynamic Accrual (3%)
-Lowest exit load scheme is ICICI Prudential All Seasons Bond Fund (0.25%)
-Zero exit load schemes are:
● Indiabulls short term fund
● PGIM India Mutual Fund
● Principal cash management fund

2) Does Any country across the globe still charge Entry load?
No comeback for entry load
Newly-appointed Securities and Exchange Board of India, or SEBI, Chairman
U.K. Sinha, who earlier headed UTI Mutual Fund as well as the Association of Mutual Funds
in India, or AMFI, has decided not to lift the ban on entry load for mutual funds. Prior to the
ban in August 2009, fund houses charged investors around 2.25 per cent of the amount
invested as entry load to meet distribution and marketing expenses, including commissions.
While banning the entry load, SEBI had allowed funds to collect a maximum of one per cent
of the amount invested as exit load from investors who sell out prematurely.

Its implications: The mutual fund industry has been reeling under the impact of the 2009 ban,
resulting in redemptions and a net outflow of Rs 18,044 crore as wealth advisers tell clients to
shift to other products. The ban has also impacted new fund offers, or NFOs, of many equity
funds. As per AMFI data, just 24 equity funds were launched in 2010, garnering some Rs
3,000 crore, compared to 33 NFOs launched in 2009 that mopped up Rs 7,284 crore. Besides,
the ban has shrunk the revenues of distributors, forcing them to advise clients to either redeem
their equity schemes or invest in insurance and fixed deposits, which earn them higher
commissions. Currently, distributors are allowed to charge a fee from the investor, but they are
required to follow a dual cheque system: separate cheques for the investment and the
commission.

Benefits: The ban was aimed at bringing more transparency into the system, and its removal
would have promoted mis-selling of products. Prior to the ban, different fund houses were
paying a wide range of commissions to agents for selling their schemes. Agents often
promoted funds that promised them the highest fee. Persisting with the ban will result in
heightened competition among distributors and ensure better customer service.

Alternative model: Some feel SEBI has gone overboard in trying to correct the wrong
practices and ended up discouraging distributors from selling mutual funds. "There are many
good products in the market, but nobody is selling them and, therefore, there are no buyers,"
says Sanjay Matai, promoter, Wealth Architects, a Pune wealth advisory firm. SEBI has set up
a panel to devise a new incentive model for distributors, in which investors could be asked to
pay a service fee, while commissions for distributors could be borne by the asset management
companies.
Global experience: In developed countries such as the United States, Canada and Britain,
mutual funds are divided into three categories: a front-end load, back-end load and no-load
options. When buying a mutual fund with a front-end load, the investor pays an up-front
commission. In the case of funds with the back-end load, a fee is charged at the time of
redemption. No-load funds can generally be purchased or redeemed without a sales
commission.

DEBT MUTUAL FUND

Debt funds are mutual funds that invest in fixed income securities like bonds and treasury
bills. Gilt funds, monthly income plans (MIPs), short term plans (STPs), liquid funds, and
fixed maturity plans (FMPs) are some of the investment options in debt funds. Apart from
these categories, debt funds include various funds investing in the short term, medium-term
and long term bonds.
Debt funds are preferred by individuals who are not willing to invest in a highly volatile
equity market. A debt fund provides a steady but low-income relative to equity. It is
comparatively less volatile.
Who Should Invest in Best Debt Mutual Funds?
Debt funds are suitable for those investors that are risk-averse and not ready to have equity
exposure. Debt funds grow investors’ wealth with little to no risk. Additionally, these funds
are concerned with regular income. Investors usually stay invested in debt funds for a short to
medium-term horizon. You need to choose an appropriate debt fund as per your investment
horizon.

Liquid funds may be suitable for a short-term investor who generally parks his or her surplus
funds in a savings bank account. Liquid funds provide higher returns in the range of 7% to 9%
in addition to the flexibility of withdrawals at any time just like a savings bank account. If you
need to ride the interest rate volatility, then dynamic bond funds may be an ideal option. These
funds are suitable for a medium-term investment horizon to earn higher returns than a 5-year
bank FD.

SBI Magnum Constant Maturity Fund

Rate of return 8.41%
NAV 48.4025
Fund manager Dinesh Ahuja
AUM 684.74

ICICI Prudential Constant Maturity Gilt Growth

Rate of return 11.1
NAV 18.4859
Fund manager Rahul Goswami
AUM 219 Cr

UTI Gilt Fund

Rate of return 8.93%
NAV 48.557
Fund manager Amandeep Singh Chopra
AUM 650.56 Cr
Axis Banking & PSU Debt Fund
Rate of return 8.89
NAV 1993.0458
Fund manager Aditya Pagaria
AUM 15,317 Cr

LIC MF Banking & PSU Debt Fund

Rate of return 7.79%
NAV 28.12
Fund manager Marzban Irani
AUM 1,433.26 Cr

INDEX FUND

An index fund is a type of mutual fund or exchange-traded fund (ETF) with a portfolio
constructed to match or track the components of a financial market index, such as the Standard
& Poor's 500 Index (S&P 500). An index mutual fund is said to provide broad market
exposure, low operating expenses, and low portfolio turnover. These funds follow their
benchmark index regardless of the state of the markets.

Index funds are generally considered ideal core portfolio holdings for retirement accounts,
such as individual retirement accounts (IRAs) and 401(k) accounts. Legendary investor
Warren Buffett has recommended index funds as a haven for savings for the later years of life.
Rather than picking out individual stocks for investment, he has said, it makes more sense for
the average investor to buy all of the S&P 500 companies at the low cost an index fund offers.

How an Index Fund Works

"Indexing" is a form of passive fund management. Instead of a fund portfolio manager

actively stock is picking and market timing that is, choosing securities to invest in and
strategizing when to buy and sell them the fund manager builds a portfolio whose holdings
mirror the securities of a particular index. The idea is that by mimicking the profile of the
index the stock market as a whole, or a broad segment of it the fund will match its
performance as well.

EQUITY MUTUAL FUND

Equity mutual funds try to generate high returns by investing in the stocks of companies
across all market capitalizations. Equity mutual funds are the riskiest class of mutual funds,
and hence, they have the potential to provide higher returns than debt and hybrid funds. The
performance of the company plays a significant role in deciding the investors’ returns.

How do Equity Funds work?

Equity mutual funds invest at least 60% of their assets in equity shares of numerous
companies in suitable proportions. The asset allocation will be in line with the investment
objective. The asset allocation can be made purely in stocks of large-cap, mid-cap, or small-
cap companies, depending on the market conditions. The investing style may be
value-oriented or growth-oriented. After allocating a significant portion towards the
equity segment, the remaining amount may go into debt and money market instruments. This
is to take care of sudden redemption requests as well as bring down the risk level to some
extent. The fund manager makes buying or selling decisions to take advantage of the changing
market movements and reap maximum returns.

Who should invest in Equity Funds?

For budding investors- If you are an aspiring investor who wants to have exposure to the
stock market, then large-cap equity funds may be the right choice. These funds invest in
equity shares of the top-performing companies whose risk level is low.

For market-savvy investors -If you are well-versed with the market pulse and willing to take
calculated risks, then you may think of investing in diversified equity funds. These invest
in shares of companies across all market capitalizations.
HYBRID FUND

A hybrid fund is an investment fund that is characterized by diversification among two or

more asset classes. These funds typically invest in a mix of stocks and bonds. They may
also be known as asset allocation funds. Hybrid funds offer investors a diversified portfolio.
The term hybrid indicates that the fund strategy includes investment in multiple asset classes.
Hybrid funds are commonly known as asset allocation funds. In the investment market, asset
allocation funds can be used for many purposes. These funds offer investors an option for
investing in multiple asset classes through a single fund.

How Do Hybrid Funds Work?

Hybrid funds aim to achieve wealth appreciation in the long run and generate income in the
short run via a balanced portfolio. The fund manager allocates your money in varying
proportions in equity and debt based on the investment objective of the fund. The fund
manager may buy/sell securities to take advantage of market movements. Who Should Invest
in Hybrid Funds?

Hybrid funds are considered a safer bet than equity funds. These provide higher returns than
genuine debt funds and are popular among conservative investors. Budding investors who are
willing to get exposure to equity markets may invest in hybrid funds. The presence of equity
components in the portfolio offers the potential to earn higher returns.

At the same time, the debt component of the fund provides a cushion against extreme market
fluctuations. In this way, you receive stable returns instead of a total burnout that may happen
in case of pure equity funds. For the less conservative category of investors, the dynamic asset
allocation feature of some hybrid funds becomes a great way to enjoy the best out of market
fluctuations.

ETF

An exchange traded fund (ETF) is a type of security that involves a collection of securities
such as stocks that often tracks an underlying index, although they can invest in any number of
industry sectors or use various strategies. ETFs are in many ways similar to mutual funds;
however, they are listed on exchanges and ETF shares trade throughout the day just like
ordinary stock.

Some well-known example is the SPDR S&P 500 ETF (SPY), which tracks the S&P 500
Index. ETFs can contain many types of investments, including stocks, commodities, bonds, or
a mixture of investment types. An exchange traded fund is a marketable security, meaning it
has an associated price that allows it to be easily bought and sold.

An ETF is called an exchange traded fund since it's traded on an exchange just like stocks. The
price of an ETF’s shares will change throughout the trading day as the shares are bought and
sold on the market. This is unlike mutual funds, which are not traded on an exchange, and
trade only once per day after the markets close. Additionally, ETFs tend to be more cost-
effective and more liquid when compared to mutual fund.

How to Buy and Sell ETFs

ETFs trade through online brokers and traditional broker-dealers. You can view some of the
top brokers in the industry for ETFs with Investopedia's list of the best brokers for ETFs. An
alternative to standard brokers are robo-advisors like Betterment and Wealth front who
make use of ETFs in their investment products.

NATIONAL PENSION SCHEME(NPS)

National Pension Scheme (NPS), a government-sponsored pension scheme, was launched in

January 2004 for government employees. It was opened to all sections in 2009. A subscriber
can contribute regularly in a pension account during her working life, withdraw a part of the
corpus in a lump sum and use the remaining corpus to buy an annuity to secure a regular
income after retirement.

Contributions made by individual subscribers to a National Pensions Scheme under the

system accumulates until retirement and corpus growth continues via market-linked returns.
Subscribers also have an option to exit this plan before retirement or opt for superannuation.
However, this scheme ensures that a part of savings is utilized to provide a subscriber with
retirement benefits. Thus, on retirement, exit or superannuation, at least 40% of the
contribution is utilised for the procurement of lifetime pension via the purchase of an annuity.
The remaining funds are paid to the subscriber in a lump sum.

a) Find out the maximum and minimum amount that you can invest in NPS.
The minimum deposit is Rs 1,000 per annum to keep the account active. The NPS Tier
1 account matures at the age of 60 and you can extend it till the age of 70.
NPS Tier 1 is eligible for tax deduction on contributions up to Rs 1.5 lakh under Section
80 C and an additional Rs 50,000 under Section 80 CCD (1B) of the Income Tax Act,
1961. On withdrawal, 40% of the NPS Tier 1 account balance can be withdrawn tax-free.
Another 40% must be compulsorily used to buy an annuity (monthly pension). The
remaining 20% can either be used to buy an annuity or can be withdrawn after paying tax
(at your slab rate).

• A government employee can invest maximum of Rs 1.5 lakh in the Tier-II account of
NPS to claim tax benefit under section 80C. Unlike lock-in period
till the age of retirement, the investment made in Tier-II account of NPS under section
80C comes with a lock-in period of three years.

b) Find out lock-in period of NPS

Very long lock-in period
All tax-saving investments have lock in periods, but none as long as that of the NPS. The NPS
can only be withdrawn at the age of 60.

If you start at the age of 25-30, the lock-in period is 30-35 years. Even then, only
60% of the corpus can be withdrawn, and the remaining 40% will have to be put into an
annuity for a monthly pension.
c) Who Should Invest?
The National Pension Scheme has come as a boon to any salaried person who is not
eligible for pension from the employer. It is also an ideal choice for people who are looking
for a low-risk investment that can provide a regular income during their retired life. Since the
scheme comes with tax benefits, it is an excellent tax- saving instrument.

PUBLIC PROVIDENT FUND(PPF)

Public provident fund is a popular investment scheme among investors courtesy its
multiple investor-friendly features and associated benefits. It is a long-term investment
scheme popular among individuals who want to earn high but stable returns. Proper
safekeeping of the principal amount is the prime target of individuals opening a PPF account.

Why open a PPF account?

A Public provident fund scheme is ideal for individuals with a low risk appetite. Since this
plan is mandated by the government, it is backed up with guaranteed returns to protect the
financial needs of the masses in India. Further, invested funds in the PPF account are not
market-linked either.
Investors can also undertake the public provident fund regime to diversify their financial and
investment portfolio. At times of downswing of the business cycle, PPF accounts can
provide stable returns on investment annually.

a) Current interest rate of PPF

Interest payable on PPF is fixed quarterly by Ministry of Finance, Government of
India from April 1st, 2016.
Banks offer PPF accounts at the rate fixed by Indian Government. Current PPF interest rates
offered by SBI, ICICI and all banks is 7.10% as applicable from 1st July, 2020.
b) How to withdraw money from PPF?
 An account holder can make a partial withdrawal from his PPF account every year,
starting from the seventh financial year.
 The withdrawal is allowed up to 50% of the total balance at the end of the fourth financial
year immediately proceeding the year of withdrawal. Or Total
balance at the end of the financial immediately preceding the year of withdrawal
whichever is lower
 PPF withdrawal is tax-free. After the end of 15 years of PPF account, an
account holder can choose to stay invested even without making any further
deposits. The current account balance will continue to earn interest. During this extended
period, an account holder can withdraw any amount once every year.
 After the expiry of 15 years, an account holder can choose to stay invested
and also make deposits, the account can be extended in blocks of 5 years
 During this extended block of 5 years, an account holder can withdraw up to 60% of the
balance at the beginning of each block.

c) How to take a loan on PPF?

1. An account holder can avail of a loan against the deposits in a PPF account. An
account holder can take a loan from the third financial year and till the end of the
sixth financial year.
2. The loan amount cannot exceed 25% of the balance at the close of two years
immediately proceeding the year in which the loan is being availed. Example- if the
account was opened in the financial year 2017-18, the first can be availed from the
financial year 2019-20
3. Before applying for a new loan, the account holder must clear the earlier loan. In a
financial year, the account holder can avail only one loan even if the earlier loan is
paid off
4. The loan taken must be repaid within 36 months. The account holder must submit
Form D as a loan application. The rate of interest on the loan will be 2% over and
above the prevailing PPF interest rate.

d) PPF Tax Benefits

PPF contributions made every year are eligible for tax deductions under Section 80C of the
Income Tax Act, 1961. The deductions can be claimed by anyone for the same limit. The
deduction limit for PPF deposits was Rs.1 lakh which has been increased to Rs.1.5 lakhs from
FY 2014-15.
PPF accounts also have a maximum deposit limit of Rs.1.5 lakhs per year, therefore, all
deposits made to your PPF account can be claimed as deductions u/s 80C. Section 80C allows
for a maximum deduction of Rs.1.5 lakhs per year inclusive of all investment instruments.

PPF accounts also offer other tax benefits. Interests earned from PPF deposits are tax-free,
while wealth tax is not applicable on PPF accounts and proceeds. Therefore, PPF accounts
offer you triple exemption benefits – deduction on deposits, tax-free returns and no wealth tax.

e) Disadvantages of PPF
 Fixed Interest Rate:

PPF investments have a fixed interest rate which may not always keep pace with inflation.
In 2010 and 2011, inflation went into double digits but the PPF interest rate remained at
8%.

 Lower returns than Mutual Funds, NPS:

 Mutual Funds and NPS have an equity component and hence have given higher returns
than PPF in the long term.

 Less flexible:
PPF has limitations on withdrawals. It allows withdrawals from the 7th financial year after
the year of account opening. Thereafter it only allows partial withdrawals up to 50% of the
balance in the PPF account. In terms of loans, there are similar restrictions such as when it
can be taken (3rd to 6th year from account opening) and how much (25% of the account
balance in the 2nd year preceding the year of account opening).

• No joint accounts allowed in a PPF

No joint accounts are allowed in PPF, unless you open the same with a minor.
However, nominations are allowed. Being a very long term instrument, you must make a
nomination in the PPF account. This will avoid hassles at a later stage, especially for the
legal heir.
• NRIs cannot open fresh accounts in PPF
NRIs are not allowed to open fresh accounts. However, if you had an account as
a resident Indian and have now become an NRI you can continue to contribute to the PPF.
Again, you will receive benefits like tax benefits.
f) Unique selling proposition of PPF

The Public Provident Fund's (PPF) USP is its EEE tax status, i.e., at the time of investment,
interest earned during the investment period, and the maturity proceeds are exempted from
tax. However, the scheme does come with a long lock-in period of 15 years.

g) Target audience of PPF

A Public provident fund scheme is ideal for individuals with a low risk appetite. Since this
plan is mandated by the government, it is backed up with guaranteed returns to protect the
financial needs of the masses in India. Further, invested funds in the PPF account are not
market-linked either.

NON-CONVERTIBLE DEBENTURE
Debentures are long-term financial instruments which acknowledge a debt obligation towards
the issuer. Some debentures have a feature of convertibility into shares after a certain point of
time at the discretion of the owner. The debentures which can't be converted into shares or
equities are called non-convertible debentures (or NCDs).

Non-convertible debentures are used as tools to raise long-term funds by companies through a
public issue. To compensate for this drawback of non- convertibility, lenders are usually given
a higher rate of return compared to convertible debentures.

Besides, NCDs offer various other benefits to the owner such as high liquidity through stock
market listing, tax exemptions at source and safety since they can be issued by companies
which have a good credit rating as specified in the norms laid down by RBI for the issue of
NCDs. In India, usually these have to be issued of a minimum maturity of 90 days.

● Secured and unsecured NCDs

An NCD can either be secured or unsecured. A secured NCD is backed by the
issuing company’s assets. This means that the company has to fulfil its debt obligation
whatsoever. However, that’s not the case for unsecured NCDs. This makes secured NCDs
safer since they have a lower default risk.
● High interest rates

The rate of return on NCDs is around 11-12%. This is high compared to most investment
options. For example, fixed deposits (FDs) are another popular avenue where people put
their money for regular returns. However, the returns are much lower.
There are various interest payout options including monthly, quarterly, semi- annually and
annual payments. The maturity period for an NCD can be anywhere between 90 days to 20
years. This gives you the flexibility to choose between short and long tenures based on your
investment goals.
● Liquidity

Since they are listed on the stock exchanges, NCDs are easy to withdraw. Redeeming your
NCD investment may be a little tougher than selling regular stocks, but they are more liquid
than bank fixed deposits.
● Ratings
If you seek to buy NCDs, it is very important to know the rating of the debenture before you
buy it. Every company that seeks to raise money through an NCD is rated by agencies such as
Fitch Ratings, CRISIL, ICRA and CARE. These rating agencies rate the company based on its
ability to service its debt on time. So, a lower rating means a higher credit risk.
● Tenor

A non convertible debenture is simply a debt instrument used by a company when it wishes
to raise money from the public. The company issues a debt paper for a specific tenor. During
this period, it pays a fixed rate of interest to the buyer. This could be on a monthly, quarterly
or annual basis. At the end of the tenor, the money that is invested is returned back to the
buyer.
● Yield

Yield is a financial jargon used to describe the income return earned on a security over a
specific period of time. In case of NCDs, the yield on redemption has been quite attractive for
buyers. This is because they generally offer higher yields when compared to even corporate
FDs.
● Payout options
In case of payout, you can pick monthly, quarterly, annually or cumulative. When
you opt for cumulative returns, you will get a slightly higher return compared with, say a
monthly payout. The reason to pick the payout option depends on when you need the money
and for what purpose.

SUKANYA SAMRIDDHI YOJANA

Sukanya Samriddhi Yojana is a small deposit scheme of the Government of India meant
exclusively for a girl child and is launched as a part of Beti Bachao Beti Padhao Campaign. The
scheme is meant to meet the education and marriage expenses of a girl child. It offers a high
interest rate of 7.6% and tax benefits under 80c.

Features

Attractive interest rate of 7.6%, that is fully exempt from tax under section 80C.
● Minimum Rs. 1,000 can be invested in one financial year
● Maximum investment of Rs. 1,50,000 can be made in one financial year
● If the minimum amount of Rs 1000/- is not deposited in any financial year , a penalty of
Rs 50/- will be charged
● Deposits in an account can be made till completion of 14 years, from the date of opening
of the account
● The account shall mature on completion of 21 years from the date of opening of the
account, provided that where the marriage of the account holder takes place before
completion of such period of 21 years, the operation of the account shall not be permitted
beyond the date of her marriage
● Passbook will be issued to customers.

Eligibility

● The account can be opened by the natural or legal guardian for a girl child of age below
10 years.
● A depositor can open and operate only one account in the name of a girl child under the
scheme rules.
● Natural or legal guardian of a girl child are allowed to open the account for two girl
children only.
a) Find out the list of commercials banks providing these scheme List of Banks Offering
Sukanya Samriddhi Yojana
Here is a list of banks which are offering Sukanya Samriddhi Accounts for all the eligible
individuals-

1. Axis Bank
2. Punjab National Bank
3. Union Bank of India
4. ICICI Bank
5. Central Bank of India
6. IDBI Bank
7. Canara bank
8. Indian Bank
9. Dena Bank
10. State Bank of India
11. State Bank of Bikaner & Jaipur
12. State Bank of Patiala
13. State Bank of Mysore
14. State Bank of Travancore
15. State Bank of Hyderabad
16. Bank of Maharashtra
17. Punjab & Sind Bank
18. Indian Overseas Bank
19. UCO Bank
20. Bank of India
21. Bank of Baroda
22. Vijaya Bank

b) Find the Tax benefits from this scheme.

In order to encourage investments in SSY, the SSA has also been provided with certain tax
benefits:
1. Investments made in the SSY scheme are eligible for
deductions under Section 80C, subject to a maximum cap of Rs 1.5 lakhs.
2. The interest that accrues against this account which gets compounded annually is also
exempt from tax.
3. The proceeds received upon maturity/withdrawal are also exempt from income tax.
c) Find out the rules related to the closure of the scheme.
Closure on maturity
Account matures after completion of tenure of 21 years and the balance in the SSA, including
interest, is paid to the child on submitting an application and proof of identity, residence, and
citizenship documents
Premature Closure Allowed only in the following situations:

● Reasons of intended marriage after a girl child attains the age of 18 years, an application
can be submitted between one month prior to marriage and 3 months after marriage
along with her age proof documents
● Death of the girl child on the production of the death certificate the balance in the SSA
will be paid to the guardian
● Deemed closure in case of a change in the status of girl child i.e., girl child either
becomes a non-resident or a non-citizen of India. Such a status change shall be
communicated by the girl child or her guardian within one month of the status change
● After completion of 5 years from the opening of an SSA, if the post office or Bank is
satisfied that the operation or the continuation of the SSA is causing undue hardship to
the girl child (such as the death of the guardian, medical reasons of the girl child), the girl
child or guardian may order for premature closure
● For any other reasons, if the SSA is to be closed anytime after the opening of this
account, it will be permitted, but the entire deposit would only earn an interest rate
applicable to post office savings bank.

PORTFOLIO MANAGEMENT SERVICES

In general terms, portfolio management is the science of decision-making about how to invest
your money. The concept includes strategies and policies for matching investment selection to
an individual’s objectives, risk tolerance, and asset allocation requirements. All portfolio
management strategies seek to balance risk against performance. Whether you’re investing in
equities, bonds or some other type of asset, portfolio management is concerned with
determining the strengths and weaknesses of your investment selection methodology to
maximize returns relative to your risk appetite.

a) portfolio management types

1) Active Portfolio Management:
When the portfolio managers actively participate in the trading of securities with a
view to earning a maximum return to the investor, it is called active portfolio
management.

2) Passive Portfolio Management:

When the portfolio managers are concerned with a fixed portfolio, which is created in
alignment with the present market trends, is called passive portfolio management.

3) Discretionary Portfolio Management:

The Portfolio Management in which the investor places the fund with the manager, and
authorizes him to invest them as per his discretion, on the investor’s behalf. The
portfolio manager looks after all the investment needs, documentation, etc.

4) Non-Discretionary Portfolio Management:

Non-discretionary portfolio management is one in which the portfolio managers gives
advice to the investor or client, who can accept or reject it.

b) 4 investment strategy
Core: low risk
Core+: low to moderate risk
Value-added: moderate to high risk
Opportunistic: high risk
1. Core
Historic rates of return: 7 to 11%
Leverage: around 25%
Risk: low
Core real estate is the bedrock of a diversified portfolio. Its real estate that’s located in
the strong demand urban center of major metropolitan areas like New York, Los
Angeles, and Washington DC.
Core investments are almost as safe as bonds, but with much higher returns. Unlike the
stock market, core investments hold up extremely well in business cycle downturns.
Core investments are the most "all weather" of the strategies, and have the longest
window for good timing.
1) Core +
Historic rates of return: 8 to 12%
Leverage: 40-50%
Risk: low to moderate
Core plus real estate, is similar to core, but not quite as high quality. The property
might be in the suburbs, or a secondary metropolitan area. It may include riskier asset
types like self storage, entertainment, medical offices, or student housing. Core plus
investments are low to moderate risk, and return slightly more than core.

2) Value-added
Historic rates of return: 10 to 15%
Leverage: 40-70%
Risk: moderate to high

Purchasing real estate at a lower price because it is moderately distressed in some way
(rundown, poor management, etc.) and selling it for a (hopefully) higher price that
covers the cost and makes a profit.
Much of the risk in value-added strategies comes from the fact that they require
moderate to high leverage to execute (40 to 70%). Leverage does increase the return,
but also increases the risk, and makes the investment more susceptible to loss during a
real estate cycle downturn. Value-added strategy assets can be in safer primary
locations, or riskier secondary locations.
3) Opportunistic
Historic rates of return: 12% plus
Leverage: 50-80%
Risk: high

Opportunistic strategies target highly distressed properties that require major

renovations. They also involve the development of raw land, into residential or
commercial properties.

This strategy is the riskiest, because it involves the use of high leverage (50 to 80%),
and the improvement plan is much more complicated than “value- added”, and
susceptible to surprises. Additionally, there are usually significant periods of
construction when no income can be generated. And often, income can only be slowly
built up once that period ends, and may never be built up at all.

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