Back to Blog What is POP? How do you know your NPS POP? March 30, 2022 The National Pension System, or NPS is a retirement and social security plan introduced by the Government of India in 2004. Though initially introduced for government employees only, it was made accessible to all Indian citizens in May 2009. With the NPS, money invested is pooled together to form an investment fund. This investment fund is then reinvested by professional fund managers who are vetted by the Pension Fund Regulatory and Development Authority. Investments are done in the equity market in a diversified portfolio that comprises government bonds, bills, corporate shares and debentures. You can decide how much of your investment goes in to equities, but it is capped at a maximum of 75%, making the NPS a relatively safer investment plan, and suitable for building a stable retirement corpus. On retirement, you are allowed to withdraw 60% of the corpus as a lump sum, which is non-taxable. The remaining 40% is used to purchase annuities which provide you a monthly return as pension. Since the government has made the NPS available for all citizens of the country, there is now a need to provide everyone with a method that can be used when people want to operate, change or track their NPS accounts. This is where Points of Presence, or PoPs, come into play. What are PoPs? Points of Presence, or PoPs, are service providers present all across the country to ensure that you are able to operate your NPS account smoothly without any hindrance. PoPs are also appointed by the PFRDA, forming a network of branches, which are known as PoP Service Providers (PoP SP). Apart from providing you with facilities like opening a Permanent Retirement account, and being able to contribute to your NPS fund, PoPs also serve a plethora of other purposes. What are the functions of PoPs? The primary function of a PoP, or a PoP SP, is to enable you to register a Tier I or a Tier II account, as per your convenience. A PoP is responsible for accepting your duly filed Composite Subscriber Registration Form (CSRF) and verifying the form for your date of birth, bank, details of the scheme and the nominations. The PoP also serves the purpose of verifying your customer documents as per existing, prescribed norms. A PoP is also responsible for collecting your NPS Contribution Instruction Slip (NCIS) along with your application form, ensuring that mandatory and relevant details are given by you in your NCIS. They also remit the funds, after deducting their charges and taxes, to the Trustee Bank within one banking day from the date of your application. While you submit your NCIS, the PoP shall also perform the due diligence of checking your Permanent Retirement Account Number (PRAN), along with your payment details and other documents. Your contribution details are then uploaded to the Central Recordkeeping Agency system bank in correspondence to your PRAN. A Point of Presence also serves the purpose of changing your personal details as per your requirement, within one banking day of your application. You can also change your investment scheme or your fund manager, through your PoP, if you are not happy with the performance of your fund. In case you are unhappy with the overall performance of your NPS account and choose to withdraw your account, the PoP will facilitate it on the same day, provided your application is processed within banking hours. In case your application is processed after banking hours, the same is processed the next banking day. Your PoP SP is also responsible for changing your location and issuing prints of your account statement, as and when needed. In case you lose your PRAN card, you can also apply for another one from your PoP. In case you have any grievances pertaining to your National Pension System account, you can submit them to your respective PoP, which would then receive and upload the same on the Central Grievance Management System (CGMS) of the CRA. In short, all services that are prescribed by the PFRDA are provided by the PoPs or the PoP SPs. How do you know your PoP? In case you have difficulties locating a Point of Presence close to you, you can check your transaction statement, if you have one, and it should have your PoP listed. You can also locate your closest PoP by clicking here https://nps.kfintech.com/index/allcitizens/ If you are looking for a suitable solution to a stable retirement plan, you can choose to go with NPS with KFintech CRA, by clicking here nps.kfintech.com Featured Posts NPS New Rules 2026: A More Flexible Path to Retirement PlanningA Simple Guide to NPS Registration and Online Account OpeningNPS Vatsalya: Building Financial Security for the Next GenerationPlanning for Retirement with NPS: This Blog Might Be For You!NPS Returns and Retirement Planning: What Every Investor Should Know
Back to Blog Why NPS is better than other long term retirement plans? March 29, 2022 What is NPS? The National Pension System, or NPS, is a retirement plan introduced by the Government of India in 2004, and is regulated by the Pension Fund Regulatory Development Authority (PFRDA). With this retirement plan, money invested by you and others is pooled together and then reinvested into the market by professional fund managers vetted by the PFRDA. These investments are made in a diverse portfolio that consists of government bonds, bills, corporate shares and debentures. They accumulate over time and provide you with market based returns on your investments, which you can withdraw on your retirement. Who should invest in NPS? While NPS is available to all Indian citizens between the ages of 18-70, its end goal is to provide you with financial security on your retirement. Hence, it is best suited for people who are looking for a stable retirement plan and have a relatively low tolerance towards market risks. Moreover, NPS also provides tax rebates of upto Rs. 2 lakhs under Sections 80C and 80CCD of the Indian Income Tax Act. NPS allocates a portion of the accumulated corpus to equity investments, which are exposed to market fluctuations, returns and risks. The percentage of your investments that goes towards these can be decided by you, within a few limitations. It is important that you decide the right option for you depending on your investment goals, earnings and living expenses, and most importantly, your risk tolerance. NPS vs EPF While both Employees’ Provident Fund (EPF) and NPS are managed by the government, there are some factors that make them different, and may be a differentiating factor when it comes to choosing which one you want to invest in. The similarity between these retirement plans is that they both invest your money across debts and equities. The difference between them is that you do not get to choose your fund manager with EPF. In the case of NPS though, not only can you choose the fund manager, but you can also switch between fund managers if you are not happy with the performance of your funds. NPS can be said to be a more evolved retirement plan that takes into consideration your age and risk appetite. It allows you to decide on the assets you want to invest in based on your return expectations. NPS vs ELSS ELSS is a form of equity mutual fund which allows you the benefit of saving taxes, on investments upto Rs. 1.5 lakh under Section 80C, just like NPS. However, with the NPS, you also have the option to save an additional Rs 50,000 under section 80CCD (1B). Also, on maturity, you have the provision to withdraw 60% of the entire corpus as a lump sum entirely devoid of taxes, while the remaining amount is used to purchase annuity. Since ELSS is entirely based on equity, it carries a substantial amount of risk, while NPS caps equity allocation at 75% which makes it comparatively safer than ELSS. Furthermore, NPS also allows you to invest in assets like corporate bonds and government securities, which are safer than equities. Therefore, if you are looking for a retirement plan which is secure and also lowers your taxes, NPS can be a good option. NPS vs PPF Public Provident Fund, or PPF, is another savings scheme that was introduced by the Government of India, and was designed to provide fixed returns, and is not limited to pensions, unlike the NPS, which is exclusively a pension savings scheme. Since NPS is market based and carries a certain amount of risk, the average returns are higher in the long term. While it cannot be guaranteed that NPS is better than PPF, it can definitely be said that NPS can help you create a higher corpus in the long run which can help you secure your finances better. NPS vs Mutual Funds The National Pension System operates in a similar manner to that of a mutual fund, and invests your money in equities. However, unlike equity mutual funds, which are entirely based on equity market investments, NPS has a capping of 75% in the equity market, which makes it relatively safer to invest in. Furthermore, the tax savings on investments of up to Rs. 2 lakh, with NPS, also adds to the benefits, while any returns from mutual funds are subject to taxes. If you are looking to create a corpus that provides you with regular income on retirement, NPS should be the ideal choice because of the lower risk and tax benefits.To conclude, every investor has different goals for their investments and a specific mindset. You should always consult your financial advisor before you make any investment decision. If you are looking to have a stable and smart retirement plan that provides you with multiple benefits, you can choose to go with NPS by KFintech here at nps.kfintech.com. Featured Posts NPS New Rules 2026: A More Flexible Path to Retirement PlanningA Simple Guide to NPS Registration and Online Account OpeningNPS Vatsalya: Building Financial Security for the Next GenerationPlanning for Retirement with NPS: This Blog Might Be For You!NPS Returns and Retirement Planning: What Every Investor Should Know
Back to Blog Factors to consider when opening a demat account March 26, 2022 A demat account is necessary if you want to trade in the stock market, securities or other equities. If you’ve thought about trading in the stock market, you probably already know this. A demat account is essentially, just like a bank account. The difference between them is that a bank account holds your money, while a demat account keeps your shares. Since both these accounts concern your finances, there are several factors that you should keep in mind when opening one of them. While opening a demat account online is a fairly easy procedure, choosing the right one is not as simple. As an investor, especially if you are a beginner, there are a number of factors that you should consider before you finalize a service provider for your demat account. Let us take a look at some of these factors you must look at. Is the legacy of the company good enough? Whenever it comes to managing your finances, you must always consider the trust and the investor base associated with the company you choose. It is essential to look for a platform that maintains a strong base of investors, along with a presence all across the country. This ensures that your service provider of choice is trustworthy and it will help filter out operators who may not be able to deliver on the promise of excellent returns. It is best to take some time to research and do the due diligence on the legacy of your chosen depository participant, along with their customer base, the duration they have operated for, and the number of branches they operate. Does it provide robust security? Everything choice we make has its own set of pros and cons. While the virtual world provides several advantages, there is also a security risk that comes with it. We need to take in to account this risk, even more so when it concerns your finances. Your demat account provider must be equipped with state of the art security softwares and firewalls that can properly protect your financial information. Any data must be encrypted with the highest security levels when moving between servers. Should you have the same demat and trading account broker? Although most brokers operate both your demat and trading accounts, there can be scenarios, where a broker does not have a Depository Participant license, which is required for a broker to be able to open and maintain a demat account. In such cases, it is essential to submit the debit instruction slip to your broker on time after selling your shares. Failing to do so results in a bad delivery and you may end up incurring losses. Having one entity as both your broker and Depository Participant will make the procedure seamless, making your experience simpler and easier. It is definitely better to have the same broker for both types of accounts. What are the demat charges involved? While many services advertise that you can open a free demat account with them, it is important to understand that account opening charges are just one of the costs associated with maintaining your demat account. An annual maintenance charge may be billed to keep your account maintained. This charge is usually dependent on the valuation of shares present in your demat account. Every time you sell a share, and it gets debited to your demat account, a charge is incurred by NSDL or CDSL to the Depository Participant, which is also billed to you. You could also be charged a fee every time you request a physical statement, apart from any other charges that may be covered under the fine print. It is important to know and understand all of these charges since they are important and cannot be avoided, which will impact the returns you see from your trades. Is the banking, broking and custody seamless? In case your broker is a bank, the banking, broking and custody charges can be handled entirely seamlessly by the bank. The major advantage of having the same entity function as your banker and broker is that you can use NEFT, RTGS or UPI payment methods since they are usually free. Most brokers, on the other hand, charge a nominal amount in case you use an authorized payment gateway. The more seamless the process is, the easier your life gets. Does the DP provide high quality support services? Trading in the stock market is time sensitive and faster services result in more efficient trading and returns on investment. A Depository Participant should not be judged just on the basis of routine transactions, but also on the basis of the ancillary services they provide. You should consider the time duration taken by them to get your physical shares dematerialized and whether your account is automatically credited with corporate actions. Moreover, you should also consider the efficiency with which issues like customer complaints, lien and pledge are dealt with. Ensuring all these meet your requirements helps you get a more satisfactory service experience. Are there pending complaints against the DP? Through checks about the service standards of the DP are essential to judge their work hygiene and quality. A major red flag is if a Depository Participant has many pending complaints on the service level with SEBI. Furthermore, you should also ensure that there are no ongoing regulatory investigations against them. While it is true that everything you read online may not be correct, a large percentage of reviews being negative is definitely a point of concern. If you are looking to make investments and are in need of a demat account, you can create one with KFintech here https://ipo.kfintech.com/ Featured Posts How to Improve Your Chances of Getting IPO AllotmentIPO vs FPO: Understanding the Difference for Smarter InvestingHow to check your IPO Allotment Status: Key factors you need to know?IPO Investment: Strategies, Allotment Status, and Key Updates. Explained!5 Myths and Misconceptions of IPO Investments. Debunked in this blog.
Back to Blog What’s the deal with IPOs? March 24, 2022 As the name suggests, an IPO, or an Initial Public Offering, can be considered to be a company’s debut on the stock market as a publicly traded company, changing from being a privately held entity. The company that is issuing the IPO raises the capital in the primary market, and after the completion of the IPO, all investors can trade its shares, which is then referred to as the secondary market. While from the perspective of an investor, an IPO presents an opportunity to attain shares of a company that showcases the potential to grow, to the company, it is an opportunity to raise capital from the public market and use the funds for purposes that will help them achieve their ambitions of growth. Why does a company launch an IPO? While it may seem to be a simple process to bring a company into the public market, the process is long and involves a lot of steps that need to be completed. Starting from making the choice of an investment bank to ensuring the regulatory filings, there are several stages before a business can offer the shares of their company to the public. This may raise a question about why companies should trade their companies publicly, and dilute their shares. To answer this question, it is important to understand the following advantages of going public. Increased Capital: By publicly trading their company, a business has the opportunity to raise a higher capital than they could have been able to as a privately held company. The other methods of raising capital, in the form of loans, are riskier and more expensive than launching an IPO. Furthermore, a loan limits the capital raised, while an IPO allows the company to raise capital from the public market. Publicity gain: Offering an IPO allows a company to gain publicity by being listed on the stock exchange. This results in the company becoming more recognisable to the public, increasing consumer trust in the brand, its products and services. This increase in publicity also facilitates smoother acquisitions and mergers along with higher cash flow due to the publicly listed shares. Credibility Formation: A result of being a publicly listed company after an IPO causes the company to have an increased visibility, which also increases the credibility of the company. Assessment of Valuation: After a company is listed in the stock exchange, the valuation of the organisation is bsaically equal to the amount that investors are willing to pay for it. This allows investors to know and understand the valuation of the company. A proper valuation assessment also makes it easier to carry out mergers and acquisitions when needed. What kind of companies are launching IPOs? In the current scenario, a lot of companies, including new-age consumer tech companies and startups are pursuing an IPO. The year 2021 proved to be a record year for IPOs, witnessing investments worth over Rs 1.3 lakh crore across 65 IPOs. This record amount was more than four times the entire amount that was raised in 2020 by IPOs, which amounted to Rs 26,628 crore. With the Indian IPO ecosystem growing at a rapid pace, it is expected that 2022 will also bear witness to a very active IPO market. For you as an investor, it is expected to be one of the best seasons to take part in the IPO boom, and secure your future. While investors will see increased chances of investing in the market, it should be noted that in 2021, a lot of companies experienced a downturn after launching their IPO, which has resulted in investors becoming much more cognisant of current market situations. Companies likely to have an IPO in 2022 include the likes of the highly anticipated LIC, along with companies like Pharmeasy, MobiKwik and Ixigo. In 2021, new age digital firms like Zomato and Nykaa succeeded in gaining the highest amounts in fresh capital. However, PayTM, which raised Rs.18,300 crores through their IPO, surpassing Coal India in the amount of capital raised, saw a decline in their share prices. Should you invest in an IPO directly? Many investors buy the shares of an IPO with the intent of associating themselves with a company and earning long term gains for themselves in the process. However, there are also investors who invest in IPOs with the specific purpose of listing short-term gains. Depending on the demand of a company’s shares, the listing price (the price that you actually see for a stock on the stock market) of a company can be either higher or lower than the offer price. If the demand for a company’s shares is high, the listing price becomes higher than the offer price, and you stand to make significant returns on your investment. However, according to financial experts, when it comes to well-managed companies, it is usually advisable to stay invested for the long term after investing in their IPO to give yourself the best chance of maximising your returns. Many investors are not fulfilling their maximum potential gains by exiting their investments too quickly after listing. In such cases, a thematic fund, or an equity mutual fund serves you well because they hold investments for a longer time after listing. With the IPO frenzy currently going on, it is also possible that many investors do not get shares allotted to them in the IPO. In such cases, you can also choose to take the mutual fund route to an IPO. However, it is always best to consult your financial advisor before you make an investment decision. Featured Posts How to Improve Your Chances of Getting IPO AllotmentIPO vs FPO: Understanding the Difference for Smarter InvestingHow to check your IPO Allotment Status: Key factors you need to know?IPO Investment: Strategies, Allotment Status, and Key Updates. Explained!5 Myths and Misconceptions of IPO Investments. Debunked in this blog.
Back to Blog 3 Reasons Why You Need A Demat Account March 22, 2022 To understand why we need a Demat account, we should first understand what a demat account is and what it does. Just like a bank account protects your money, a demat account is responsible for holding your shares and securities in a consolidated electronic format. A demat account aims at making your trades in the equity market easier and simpler by gathering all your crucial information together in one place. It allows you to conduct transactions of shares and stocks conveniently under a single roof without the hassle of needless paperwork. The stock market is now open for everyone who desires to generate wealth from investments in the equities market. In years past, it used to be the case that a broker was hired to seek their opinion on which investments to go for. You, as an investor would not have been able to enter the stock market without having a broker. The advent of online trading, however, has made this huge opportunity available for the masses. Online trading gives you the provision to make trades directly in the market without having a broker. However, a demat account is mandatory before you begin your investment journey. If you are already an investor, you are surely familiar with the term Demat account, even if you do not hold one yourself. There are many investors who feel conflicted on the opinion of holding a demat account, or have a certain trust ingrained in the traditional trading methods. The following points would hopefully help you make up your mind about opening a demat account. Time saving Stock market trades are time sensitive and require heavy observation to make the right decisions. In such a time sensitive market, traditional methods of trading, that take a lot of time to complete a single transaction, can cause you to miss out on precious moments that could have been used for making additional purchases and sales of security holdings. It is hugely beneficial to have a demat account since the trading process is conducted electronically and requires much lesser time than traditional methods. In today’s day and age, a demat account has become a necessity for investors who are entering the stock market. Easy Storage Physically held shares and security certificates come with the hassle of storing them securely, as they are prone to theft and damage. A demat account changes the form of the shares and securities, from being a physical document to a virtual one. This makes storing them easy, and these electronic forms of shareholding are easily bought, sold or transferred. With traditional trading methods, you were required to put in a lot of effort into acquiring the shares of your choice, and it used to be a difficult process since you would not be allowed into the stock market directly. Your only gateway possible was by having a broker. With a demat account, you are free from all these problems. The Mandate SEBI has issued a mandate wherein all investors are required to hold a demat account in order to conduct transactions. Therefore, it is essential for all investors, who are interested in making trades online, to hold a demat account. They are required to choose their depository participant and ensure that their demat account is ready before they begin trading in stocks and shares in the equity market. In case you are interested in making trades in the stock market, and are looking for a demat account, you can open one here https://ipo.kfintech.com/ with KFintech. You have the option to choose a depository participant from a list of 50+ DPs. If you already have a Demat account, you can refer your family and friends, and earn upto Rs. 400 for every account that is successfuly opened. While they can go with the depository participants of their choice, you also have the option to choose a depository participant for them. Featured Posts How to Improve Your Chances of Getting IPO AllotmentIPO vs FPO: Understanding the Difference for Smarter InvestingHow to check your IPO Allotment Status: Key factors you need to know?IPO Investment: Strategies, Allotment Status, and Key Updates. Explained!5 Myths and Misconceptions of IPO Investments. Debunked in this blog.