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December 7, 2020

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Malware attacks on small businesses remain a serious cyber threat. Malware refers to malicious code or software, which can have multiple or a specific use. Scammers and hackers often rely on malware to steal, modify, or gather data, or sometimes, to just spy on user activities. In this post, we are discussing the basics of malware prevention and other aspects that matter. 

Should your small business worry about malware?

Malware can affect your business in many ways and can origin from different sources. For instance, a considerable number of malware incidents are related to phishing emails and unverified downloads. Small businesses do not spend as much on cybersecurity and are often not cautious with malicious files and downloads. As a result, many brands and companies have suffered extensively in many ways. There are instances, where companies have been forced to a pay a ransom, so that they can gain control of their operations, following a ransomware attack. So yes, your business has to take malware prevention on priority. 

What steps can be considered?

  • Stop careless web browsing. This may mean restricting access to many websites, or limiting the use of internet at the workplace, but find the best way to avoid careless internet browsing. 
  • Let your employees know what malware attacks are all about, with examples. Each employee should know how social engineering works and ways in which a hacker or scammer may try to target them.
  • Remove old software. Old, unused, and obsolete software and firmware should be removed immediately. Make this mandatory for legacy software in particular, and yes, update everything else, including your operating systems. 
  • Recommend a spam filter. Many malware attacks happen through emails, and more often than not, an employee is to blame. Since phishing emails are rather common, using a spam filter can help your employees to a large extent. 
  • Use antimalware software. There are some really good antimalware software suites out there, which are effective and useful against a wide range of malware types, including ransomware, viruses and trojans. Find one that’s designed for small businesses and is effective for the same. 

Finally, consider spending on cyber insurance. Sometimes, despite your best efforts, things may go wrong, and you don’t want to bear the brunt and all the consequences, especially when your company did enough for malware prevention. Check online to find more on cyber insurance, and make sure that malware remains a core aspect of employee cyber awareness training.

 

Today there are so many mutual fund categories that you will find schemes catering to the needs of almost every individual. This is why financial advisor ask retail investors to first understand their appetite for risk before investing in mutual funds. Although mutual funds have historically offered far better returns as compared to conservative schemes, some funds like equity schemes are highly volatile in nature. Mutual funds are a pool of professionally managed funds that invest in a diversified portfolio of securities for income generation. 

ELSS is an open ended mutual scheme introduced for those looking to invest in a tax saving instrument. ELSS is a better tax saving scheme as compared to traditional tax saving schemes for several reasons. ELSS is probably the only investment scheme that comes with a tax benefit. Also, since this scheme comes with a predetermined lock in period of three years, investors cannot withdraw their ELSS funds for a minimum period of 36 months from the date of investment. However, the three year lock in period is probably the shortest among other tax saving instruments. 

Here’s an example to help you understand how equity mutual funds like ELSS work:

Investors can invest up to Rs. 1.5 lakhs in an ELSS scheme and claim tax exemption for this investment amount. That’s because according to the Section 80C of the Indian Income Tax Act, 1961 an investor can invest up to Rs. 1.5 lakh per fiscal year in ELSS funds and claim tax deduction from their gross annual income. So, if you earn Rs. 12 lakhs per annum and invest Rs. 1,50,000 in ELSS funds you can bring down your annual tax liability to Rs. 10.5 lakhs.

What are some of the benefits of ELSS fund investments?

The biggest advantage of an ELSS scheme is that it comes with a tax benefit. Since ELSS is probably the only mutual fund scheme to offer that, it has an upper hand over other equity mutual funds. Apart from helping investors get rid of their tax woes, the three year lock in ensures that the invested amount continues to grow and accrue interest over the long term. Also, there is no upper limit for investing in ELSS, however one cannot claim for tax deductions exceeding Rs. 1.5 lakhs for their investments in ELSS schemes. There are some fund houses which offer the option of investing an amount as low as Rs. 500 per month in ELSS which makes it an approachable investment choice for almost everyone. 

Are ELSS investments entirely risk free?

Although ELSS funds offer investors with a tax benefit, they cannot be termed risk free. As the names suggest, an ELSS schemes aims at generating capital appreciation by predominantly investing across company stocks and other equity related instruments. In fact, with an equity oriented portfolio, ELSS become a high volatile investment. That’s because equity funds like ELSS are prone to market’s volatile nature. Over the short term, one can even incur losses from their ELSS investments. This is why most ELSS investors prefer the option of investing in ELSS via SIP. Systematic Investment Plan (SIP) is an easy and convenient way to invest in mutual funds. With SIP, investors needn’t worry about market vagaries as only the amount which invest monthly is exposed to market’s volatile nature. Also, the three year lock in assures that investors are able to build a decent corpus using ELSS funds. 

ELSS funds carry a high risk rewards ratio. If the ELSS fund that you invested in is giving decent returns even after the lock in period, investors can continue to remain invested instead of withdrawing the fund. However, ELSS doesn’t offer guaranteed returns and thus, investors are expected to determine their appetite for risk before investing. 

Thanks to the advancement in the world of investing, people do not have to depend on conservative investing tools anymore of income generation. Back in the day, middle income earners only had options like bank FDs and post office savings schemes for investment. The problem with conservative schemes is that they have lengthy lock in periods, offer fixed interest rates and do not have any liquidity. Also, the interest rates that they offer is generally on the lower end and may not be adequate enough for investors to achieve their life’s short term or long term financial goals. In the recent past, mutual funds have offered decent capital appreciation for investors seeking capital appreciation over the long term. For those who aren’t aware, mutual funds are a pool of professionally managed funds that offer active risk management. The reasons mutual funds have found success with generating far more returns than conservative schemes are because they invest in a diversified portfolio of securities.

What Asset Management Companies owning mutual funds do is that they collect money from investors sharing a common investment objective and invest this pool of funds across various asset classes and marketable securities. Depending on the nature of the scheme and its investment objective, a mutual fund may invest across various money market instruments including equity, debt, gold, real estate, corporate bonds, G-sec, etc. In order to help investors, make an informed investment decision, market regulator SEBI has further categorized mutual funds based on their unique characteristics like asset allocation strategy, investment objective, risk profile etc.

Of the several mutual fund categories, equity schemes have been the most sought after mutual fund schemes that are known to offer far better capital appreciation as compared to other investment vehicles. They have a high risk rewards ratio and have historically become offered exceptional returns over the long term. This is why mutual fund experts recommend investors to keep a long term investment horizon while investing in equity schemes. Thanks to the introduction of equity schemes like global funds, it is now possible for investors to even seek capital appreciation by investing in international markets and economies. 

What are global mutual funds?

Global mutual funds or international equity mutual funds are open ended schemes investing across international markets. Investors who carry a moderately high risk appetite and looking for diversification can invest in global funds. 

Benefits of investing in global funds

Today, we as consumers have definitely bought goods or services of global giants that have entered India. Google, Amazon, Microsoft, Facebook are only few of the many names that have become common in Indian households. If we are using their services or buying products online, we are helping their business grow. Then why not invest in such companies when you have the chance to do so. Also, the Indian GDP is facing a slow growth, something that isn’t happening with the foreign economies like the USA. Also, investing in global funds is as easy as investing in any other equity fund. Investors need to make sure that they are KYC complaint in order to start a SIP in global funds. Systematic Investment Plan is an easy and convenient way to invest in global funds. Investors can decide on a monthly investment amount they are comfortable with and invest this amount at periodic intervals. Investors can also refer to an online SIP calculator, a free online tool which might help investors get a fair idea about how much they need to invest in order to achieve success with their investments in global equity funds. Also, those who are new to mutual fund investing are expected to consult a financial advisor before investing.

There is a plethora of investment options for investors to choose from. However, only those who are good at financial planning find it easier to come with a decisive investment strategy. Most investors focus on goal based investing as it becomes easier for one to target his / her short term or long term financial goals. Investment planning is easier when you have a defined set of goals. Of course, our life’s goals might change from time to time, but certain goals remain to poignant and investors must indulge in systematic investing if they have to find success with growing their existing financial wealth. Once you have a defined set of goals, the next thing for investors to do is understand their appetite for risk. Especially if you are investing in market linked schemes like mutual funds.

Mutual funds are a pool of professionally managed funds where the fund manager buys / sells securities in quantum with the scheme’s investment objective. The goal here is to help the mutual fund scheme beat its underlying index and in turn help fund owners earn some capital appreciation. What a fund house does is that it collects money from such investors who share a common investment objective and invest this pool of funds collectively across the spectrum. A mutual fund scheme, depending on its short term / long term goal, asset allocation strategy and risk profile may invest in company stocks, debt instruments, treasury bills, government securities, call money, certificate of deposits, etc.

While equity funds are considered by investors who have a long term investment horizon and seek long term capital gains some investors have short term goals to meet. These short term goals may vary depending on the individual and their existing liabilities and financial condition. However if you have surplus cash that you received by any means like a policy you invested for the long term matured or if you inherited wealth from your estranged aunt and wondering what to do with the lump sum, you can consider parking this money in a short term fund. 

What are short term funds?

Short term funds come under debt mutual funds. Debt mutual funds are open ended schemes which usually aim at generating capital appreciation by investing in fixed income securities that mature within one to three years. This makes them far less volatile to the fluctuating markets.  

Park your money in short term funds

Short term funds only invest in those companies that are known to repay their loans and have a proven track record. This makes them almost averse to credit risk. However, investors are expected to understand that this doesn’t make short term funds entirely risk free. There is always some risk involved when it comes to mutual fund investments. Also, be it equity or debt, mutual funds do not guarantee capital appreciation. Hence, even if debt funds like short term funds may seem like a wiser choice for investors to park their money, they should not depend on one asset class for income generation. 

A short term fund can be the perfect option for anyone who wishes to add some liquidity to their portfolio or for someone who has lumpsum capital at their disposal. Short term funds are known to offer way better capital appreciation as compared to conservative schemes and it is definitely a better option rather than just letting the money sit idle in your bank savings account. Short term funds give investors an opportunity to park their money for a short term and earn stable returns with relatively lesser risk. 

However, investors who are new to investing or financial planning are expected to consult a financial advisor before investing.

 

Mutual funds are one of the most sought after investment avenues for those seek long term capital appreciation. Investors who wish to invest in equities by lack the knowledge and skill to invest directly in the stock market prefer mutual funds for several reasons. First of all, mutual funds offer active risk management. This means that every mutual fund scheme is managed by a fund manager whose job is make sure that the scheme is able to beat its underlying index and help (mutual fund) unitholders earn capital appreciation in the process. Also, mutual funds invest across the spectrum in Indian and foreign economies as well as in marketable securities. One single mutual fund unit is a combination of multiple stocks and other securities. To find an investment scheme that offers such diversification is a rarity. 

Since mutual funds invest in various economies and money market instruments, the performance of a mutual fund generally depends on the performance of its underlying assets and the various sectors and industries in which it invests. 

Market regulator SEBI has further categorized mutual funds based on these schemes’ various unique attributes like fund size, asset allocation strategy, risk profile, investment objective etc. Equity, debt, hybrid, ETF and gold are just few of the several mutual fund categories available for investment and hence, investors depending on their appetite for risk should keep a diversified investment portfolio. 

No matter which mutual fund scheme you choose to invest in, there are always two investment choices available for investors. They can either make a one time lumpsum investment and pay the entire investment amount right at the beginning of the investment cycle, or they can opt for a Systematic Investment Plan. 

What is Systematic Investment Plan?

Systematic Investment Plan, abbreviated as SIP, is a method for investing in mutual funds. SIP is probably the easiest way to invest in mutual funds especially if you wish to inculcate the discipline or regular investing. An individual must be KYC compliant if he or she has to start a SIP in a mutual fund scheme. Investors need to first decide on an investment amount they are comfortable investing at regular intervals. After completing a one time mandate with the bank, every month on a fixed date a predetermined amount is debited from your savings account and electronically transferred to the fund.

Those who are new to investing and not quite sure about how much money they need to invest in mutual funds via SIP can refer to a free online tool like SIP calculator. 

Can SIPs help investors take advantage of volatile markets?

SIP is a way to invest a fixed amount at regular intervals (mostly every month). SIP investors with a long term investment horizon might benefit from a technique referred to as rupee cost averaging. Since the investment price remains constant in SIP, whenever the markets are low and so is the NAV of the mutual fund scheme, more units are allotted to an investor’s portfolio. Similarly, when the markets are performing and the NAV of the scheme is high, less units are allotted. Rupee cost averaging takes advantage of the fluctuating markets and allots units to an investor’s mutual fund portfolio in a smarter way. This mechanism also makes sure to adjust the investment risk depending on market fluctuations. This is the best strategy to buy more fund units when the markets are low and less when the markets are less. 

SIP might be the ideal way to invest in mutual funds especially if you wish to remain invested for a longer time period. But it is always a good idea to do some background search about the scheme and its past performance before investing.