Earn Income from Equity Investments

Posted by on April 9, 2015 in Financial Matters | 0 comments

The favourite investment vehicle for people with limited income or irregular income is the bank fixed deposit. These offer 8-9% kind of assured annual income. However, in India the rate of inflation is often higher and someone, who is keeping most of his savings in fixed deposits, is losing in the long run because as the years go by, the income such an investor will earn as interest would no longer have the same buying power as they had even a few years ago.
earn income from equity investments
On the other hand, if the same money is kept in a diversified equity fund that offers a dividend trigger option like the Tata Equity PE fund, the investor would most likely earn a return that would beat the inflation and he would also be able to earn a reasonably regular income because whenever the market rises making the NAV of the fund surge as well, the fund house will declare a dividend. This is a great way of booking profit when the market rises. We are going through uncertain times and wouldn’t it be wise to book some profits from your equity investments when the market moves northwards?

Tata Equity PE fund offers two ’Dividend Trigger Options’ under its existing dividend option. The trigger options are for 5% and 10% appreciation of the funds NAV respectively. The fund automatically declares a dividend when there is an appreciation of the NAV from the last ex-dividend NAV during the immediately preceding quarter by 5% or 10%.

What’s more, Tata Equity P/E Fund follows the value-conscious style of investing. The Scheme aims to invest at least 70% of its assets in companies which, at the time of investment, have a rolling twelve month P/E ratio that is lower as compared with the rolling twelve month P/E ratio of the BSE Sensex. Buying good companies at an attractive P/E ratio is a fundamental tenet of value investing and Tata Equity PE fund does just that.

[Caveat: The suggestions offered in this post are by way of guidance only and are solely based on the personal knowledge and experience of this blogger. Readers are requested to make their own assessments before investing.]

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