World Investor Week 2024

Investor awareness is essentially an informed perspective on markets and investments. Awareness helps you to create wealth and protect your financial interests. Every year in the month of October, IOSCO (a global association of market regulators) runs a global campaign to encourage investor protection and awareness. This year India is celebrating the World Investor Week from 14^th to 20^th October.

Suggested reading: World Investor week 2023

Themes for World Investor Week 2024

• Crypto assets


• Technology and digital finance


• Fraud and scam prevention


• Investor resilience


• Sustainable finance


• Basics of investing

We will touch upon these themes in brief, especially from the point of view of mutual fund investments.

Crypto assets

Crypto currency is a digital currency like Bitcoin which can be used for digital payments in e-commerce, cross border transactions, peer to peer transactions etc. Crypto asset transactions run on blockchain, which is a decentralized ledger that records and confirms all transactions. The price of crypto assets fluctuates based on demand and supply. Crypto currency is popular because it may give high returns due in increase in demand for digital assets with technological advances.

Let us now compare crypto assets and mutual funds. Both are investment options since both have growth potential. While both can be converted to cash, the process is much simpler for the average retail investor in mutual funds. Crypto assets can be converted to cash in India through crypto exchanges and peer to peer marketplace. Mutual funds can be redeemed with the asset management company and the redemption proceeds are credited to your bank account.

However, there are major differences which you must be aware of. While mutual funds are regulated by the market regulator, crypto transactions are unregulated. As a result crypto assets are more susceptible to frauds and scams. Mutual funds performance is linked with market performance, while crypto can be highly volatile. Profits made in crypto assets are taxed at 30% (source: Finance Bill 2022, Clause 28 – Amendment to Section 115BBH), while short term and long term capital gains in equity mutual funds are taxed at 20% and 12.5% (after allowing a tax exemption on long term capital gains of up to Rs 1.25 lakhs, Source: Finance Bill 2024).

Technology and digital finance

Digital tools have made mutual fund investments much simpler and convenient from an execution standpoint. You can do online KYC and make mutual fund investments using your smartphone or personal computer. While digital technology can save considerable time and effort in carrying out transactions, you should do your due diligence about the risk profile of the product and performance track record of the scheme. You should also ensure that the digital platform is either registered with AMFI or SEBI. Finally, with proliferation of finfluencers on social media, you should use your discretion in distilling the information provided on these digital. Try to verify the information that you receive before acting on it. You should consult an AMFI registered mutual fund distributor or a SEBI registered investment advisor if you need help in making investment decisions.

Fraud and scam prevention

Though the Government, central bank and market regulator have put in place a number of mechanisms and procedures in place to prevent frauds and scams, vulnerable investors regularly become victims of fraudsters. Over time, the nature of fraud has become more sophisticated with the use of technology in carrying out fraudulent or illegal activities. Fraudsters usually take advantage of lack of financial literacy and investor awareness. Understanding how fraudsters work will help in recognizing signs of fraud and avoid it. Following are some examples of fraud / scams and how you should be alert to these:-

• Avoid schemes that promise high returns and no risk because these may turn out to be fraudulent schemes. These schemes may give you promised returns for a period of time to make them look credible in eyes of other investors, but in the end you may suffer a loss. Always remember returns and risk are related and make informed investment decisions.


• Do not share personal information like bank account or credit card number, net banking login credentials, ATM pin, CVV or OTP with a person calling you on the pretext of updating your KYC or some other reason. A bank executive will not ask you to provide such information. A person who gets the abovementioned information from you can fraudulently withdraw funds from your bank account.


• Authorized mutual fund online transactions platforms like AMCs, RTAs, NSE, BSE, MFU etc provide safety / security through two-factor authentication e.g. PAN / user id / password and OTP on your mobile. Two factor authentications add an extra layer of security to prevent fraud and theft. However, as an aware investor, you should also be alert and not disclose personal information or OTP on phone.


• Do not share PAN card details with anyone who is not authorized by your financial institution e.g. bank, mutual fund, etc. Fraudsters may use your PAN card to take fraudulent loans or for other illegal purposes.


• Beware of phishing scams, whereby the scamster impersonating a bank or some financial institution may send you email, SMS or WhatsApp message to collect your personal information like account number, PAN etc. Avoid clicking on any links sent in these messages. Phishing messages are designed and delivered in a way to make the sender look genuine. Your best defence is awareness. Try to verify the authenticity of the message and the sender before acting on it.

Investor resilience

As a resilient investor, you should always factor inflation in your investment decisions like goal planning and asset allocation. Diversification helps in creating a resilient portfolio by reducing unsystematic risks. Diversified equity mutual funds invest in a portfolio of stocks across different industry sectors to diversify stock specific or sector specific risks. Asset allocation also increases resilience because different asset classes behave differently in different investment cycles, for example, one asset class may outperform, when the other one is underperforming. Diversifying your investment across different asset classes will make your investment portfolio more resilient. Finally, you should be prepared for unexpected financial challenges through contingency planning e.g. emergency fund.

Sustainable finance

Sustainability refers to how your investments will perform in the future in the face of changing risk factors e.g. environmental risks, social risks, corporate governance, regulatory risks and change in Government policies. Some mutual fund schemes provide opportunities in making sustainable investments by taking into account environmental, social and governance (ESG) in stock selection. ESG funds not only help you in making environment friendly and socially responsible investments, it can limit potential downside risks due environmental, social or governance factors.

Basics of investing

As an informed investor, you should understand the importance of goal-based investing and discipline in your investments. You need to have long term view for wealth creation since you can harness the power of compounding over long investment horizons. You should always take into account your investment objectives and risk appetite in making investment decisions.

Why is investor education important to protect your financial interests?

Investor returns (i.e. actual return made by an investor) is often lower than the fund returns mainly because of the decisions made by the investor. An informed investor will be able to make the right investment decisions and be aware of potential risk. Investor education emphasizes on the understanding of risk and return, importance of planning and discipline, as well knowledge of different investment products. Investor education can guide you through the ups and downs in your investment and help you achieve your financial goals.

Aditya Birla Sun Life Mutual Fund and investor education

Investor education is your biggest protection mechanism. As a leader in investor education since 2013, Sun Life AMC Limited (ABSLAMC Limited) works tirelessly to create a community of informed and capable investors. The goal of ABSL AMC Limited is to raise people's level of financial literacy so they can comprehend risk and return and make educated investment decisions. Most of the themes of World Investor Week 2024 deeply reflect and resonate with ABSL AMC Limited's commitment to investor resilience and sustainable investing, which is at the heart of their educational efforts, emphasizing the importance of grasping the basics of investing and aspects of investor protection. ABSLAMC Limited's has leveraged technology efforts to raise financial literacy. Digital tools like podcasts, videos, gamification etc can make learning easier and fun - You can access the digital learning platform through the website -https://mutualfund.adityabirlacapital.com/Investor-Education

Disclaimer:

The details related to tax benefits are general information only. Investors are advised that before investing, consult their Tax Consultant or Financial Advisor to determine tax benefits applicable to them.

An Investor education and Awareness initiative of Aditya Birla Sun Life Mutual Fund.

All investors have to go through a one-time KYC (Know Your Customer) process. Investors to invest only with SEBI registered Mutual Funds. For further information on KYC, list of SEBI registered Mutual Funds and redressal of complaints including details about SEBI SCORES portal, visit link https://mutualfund.adityabirlacapital.com/Investor-Education/education/kyc-and-redressal for further details.