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Investments FAQs

Common questions for HSBC investments

Investments

What are the basic rules to investing?

Here are some simple guidelines to follow for making wise investments: 

  • Set your objectives.
  • Make sure you understand exactly what risks are involved with every investment you make.
  • Do engage with your tax consultant before and during the investment journey to understand the tax implications of your every investment related decision.
  • Ask yourself whether you wish to invest or speculate.
  • For investments, make sure that you have an investment return target and the capability to accept losses before investing.
  • Do not make investment decisions out of panic when the market becomes volatile.
  • Invest as much as you can afford, but no more.
  • Always verify the past track record of at least 3-5 years of an investment firm or financial institution before investing in them.
  • Diversify. Invest internationally and spread your investments over a range of products in order to hedge against losses. However please be aware of associated currency and country risks before investing.
  • Make sure you understand exactly what risks are involved with every investment you make. If in doubt, seek professional advice.
  • Keep an eye on your investments continuously. Take opportunities and shift products if it is beneficial to do so.

When should I start planning for the future?

The sooner you start, the better. The example below shows the difference in accumulative savings between Mr.Early and Mr.Late, who started saving at different times. Mr.Early saves for 10 years and then stops. Mr Late starts 10 years later and saves for 20 years. But Mr.Early still get 87% more than Mr.Late (based upon an investment that gives 10% annual growth, not taking into account annual inflation).

Investment Scenario

Year

Savings by Mr. Early

Accumulation

Savings by Mr. Late

Accumulation

1

100,000

110,000

-

-

2

100,000

231,000

-

-

3

100,000

364,100

-

-

4

100,000

510,510

-

-

5

100,000

671,561

-

-

6

100,000

848,717

-

-

7

100,000

1,043,589

-

-

8

100,000

1,257,948

-

-

9

100,000

1,493,742

-

-

10

100,000

1,753,117

-

-

11

-

1,928,428

100,000

110,000

12

-

2,121,271

100,000

231,000

13

-

2,333,398

100,000

364,100

14

-

2,566,738

100,000

510,510

15

-

2,823,412

100,000

671,561

16

-

3,105,753

100,000

848,717

17

-

3,416,329

100,000

1,043,589

18

-

3,757,961

100,000

1,257,948

19

-

4,133,757

100,000

1,493,742

20

-

4,547,133

100,000

1,753,117

21

-

5,001,847

100,000

2,038,428

22

-

5,502,031

100,000

2,352,271

23

-

6,052,234

100,000

2,697,498

24

-

6,657,458

100,000

3,077,248

25

-

7,323,204

100,000

3,494,973

26

-

8,055,524

100,000

3,954,470

27

-

8,861,076

100,000

4,459,917

28

-

9,747,184

100,000

5,015,909

29

-

10,721,902

100,000

5,627,500

30

-

11,794,093

100,000

6,300,250

Investment Scenario

Year

1

Savings by Mr. Early

100,000

Accumulation

-

Savings by Mr. Late

-

Year

2

Savings by Mr. Early

100,000

Accumulation

-

Savings by Mr. Late

-

Year

3

Savings by Mr. Early

100,000

Accumulation

-

Savings by Mr. Late

-

Year

4

Savings by Mr. Early

100,000

Accumulation

-

Savings by Mr. Late

-

Year

5

Savings by Mr. Early

100,000

Accumulation

-

Savings by Mr. Late

-

Year

6

Savings by Mr. Early

100,000

Accumulation

-

Savings by Mr. Late

-

Year

7

Savings by Mr. Early

100,000

Accumulation

-

Savings by Mr. Late

-

Year

8

Savings by Mr. Early

100,000

Accumulation

-

Savings by Mr. Late

-

Year

9

Savings by Mr. Early

100,000

Accumulation

-

Savings by Mr. Late

-

Year

10

Savings by Mr. Early

100,000

Accumulation

-

Savings by Mr. Late

-

Year

11

Savings by Mr. Early

-

Accumulation

110,000

Savings by Mr. Late

100,000

Year

12

Savings by Mr. Early

-

Accumulation

231,000

Savings by Mr. Late

100,000

Year

13

Savings by Mr. Early

-

Accumulation

364,100

Savings by Mr. Late

100,000

Year

14

Savings by Mr. Early

-

Accumulation

510,510

Savings by Mr. Late

100,000

Year

15

Savings by Mr. Early

-

Accumulation

671,561

Savings by Mr. Late

100,000

Year

16

Savings by Mr. Early

-

Accumulation

848,717

Savings by Mr. Late

100,000

Year

17

Savings by Mr. Early

-

Accumulation

1,043,589

Savings by Mr. Late

100,000

Year

18

Savings by Mr. Early

-

Accumulation

1,257,948

Savings by Mr. Late

100,000

Year

19

Savings by Mr. Early

-

Accumulation

1,493,742

Savings by Mr. Late

100,000

Year

20

Savings by Mr. Early

-

Accumulation

1,753,117

Savings by Mr. Late

100,000

Year

21

Savings by Mr. Early

-

Accumulation

2,038,428

Savings by Mr. Late

100,000

Year

22

Savings by Mr. Early

-

Accumulation

2,352,271

Savings by Mr. Late

100,000

Year

23

Savings by Mr. Early

-

Accumulation

2,697,498

Savings by Mr. Late

100,000

Year

24

Savings by Mr. Early

-

Accumulation

3,077,248

Savings by Mr. Late

100,000

Year

25

Savings by Mr. Early

-

Accumulation

3,494,973

Savings by Mr. Late

100,000

Year

26

Savings by Mr. Early

-

Accumulation

3,954,470

Savings by Mr. Late

100,000

Year

27

Savings by Mr. Early

-

Accumulation

4,459,917

Savings by Mr. Late

100,000

Year

28

Savings by Mr. Early

-

Accumulation

5,015,909

Savings by Mr. Late

100,000

Year

29

Savings by Mr. Early

-

Accumulation

5,627,500

Savings by Mr. Late

100,000

Year

30

Savings by Mr. Early

-

Accumulation

6,300,250

Savings by Mr. Late

100,000

What should I do before I start investing?

Before you begin to think about investing your money, you should know your current financial situation and how much you can spare each month or regularly towards making the investments. Naturally, the more you can put aside now, the better it will be for your future. It is up to you to achieve a balance between your current lifestyleand your expectations.

You may use our financial planning tool to find out how much you can invest. Alternatively you can consider the below items before starting to invest.

Calculate your income and expenses taking into account the following: 

  • Monthly household expenses
  • Mortgage repayments
  • Personal tax
  • Short-term loans and overdrafts
  • Emergency funds
  • Entertainment
  • Holidays
  • School fees
  • Other family commitments

Generally speaking, whatever spare cash you have after allowing for all your expenses is what you can afford to invest. You must consider to keep aside a certain amount for any immediate exigencies. You can commit to invest a certain amount each month and look upon it as a monthly expense. As your income increases, you should also increase the amount that you invest proportionately. By doing this, you will be keeping up with inflation and your money will be working for you.

Now that I know how much I have to invest, what should I do?

Once you know how much you can invest, you need to set your objectives - why you are investing and how you are planning to use your investments. Your objectives could incorporate any combination of the following:

  • Protection for your family
  • Education for your children
  • Retirement planning
  • Managing and growing your wealth

Now make a list of your objectives, in order of priority, because you may not be able to afford to achieve every single goal. Divide your objectives into long, medium and short-term goals. This will help you to choose the type of investment that you need to make. Further you should consider your risk appetite before making any investment decision.

How do I determine my risk appetite?

Keeping your objectives in mind, determine how much risk you are prepared to take. Do you want to adopt a conservative, moderate investment strategy or an aggressive one? Ask yourself the following questions before you make your decision:

  • Are you prepared to make long-term investments, which will allow you to take greater risks for higher returns?
  • If you are going for short-term, high-risk investments, can you afford to lose some of the money that you invest?
  • If you are married with children, what is the level of risk that you can take and still be certain of their future?
  • If you want your money to be safe, will you be content with a moderate rate of return?
  • If you opt for low risk investments, will the returns be enough to cover inflation?

The important thing to remember is that, in general, you can afford to choose higher-risk investment tools for longer-term investments because, even if they go down in the short term, they are likely to show an overall upward trend over a long period. But for short-term investments, you will find low-risk products a more reliable and safer option.

You can make use of our Risk Profiling Questionnaire to help you find out more about your investment risk appetite. Please approach your Relationship Manager for the same.

What is Rupee Cost Averaging?

Rupee cost averaging is an investment strategy whereby the investor invests a fixed amount in a particular investment on a regular basis regardless of the price. This results in more units of the fund being purchased when the NAV is low and fewer units being purchased when the NAV is high. Eventually, the average cost per unit of the investment product reduce the risk of investing a large amount in a single investment at a time when the NAV is high.

What are the various types of investment /insurance products available in the market?

Some of the common investment products available in the market are:

  • Equity Shares
  • Mutual Funds
  • Bonds
  • Investment Linked Insurance Products
  • Traditional Insurance Products

What is a Mutual Fund?

A Mutual Fund(MF) is a type of investment where the money of a number of investors is pooled together into a mutual fund scheme and used by the fund manager (referred to as the ‘Asset Management Company’ or the ‘AMC’) to invest in underlying securities in line with the objectives of the mutual fund scheme.

What are the various types of mutual fund schemes?

Mutual funds schemes can be broadly classified by structure and by asset category. There are specific schemes designed around these parameters, to meet different investment objectives with regard to risk, return and investment horizon. HSBC India distributes various mutual schemes. However, for the product categories such as Liquid/Cash Fund and Close-Ended Debt Funds  (Capital Protection Oriented Plans), excluding Fixed Term Funds/Fixed Maturity Plans, the Bank only distributes products from HSBC Mutual Fund (HSBC MF) and does not offer products from other mutual fund houses.

How is investing in MFs different from investing directly into stocks / shares of companies?

When you invest in mutual funds you do not own the underlying investments (which may be stocks / shares of companies) but have a claim to a number of units in the fund representing the size of your investment. Investing in Mutual Funds allow you to achieve a much wider spread of investments than if you invested directly in the stocks/ shares of companies. It is generally accepted that by spreading your investment you are spreading your risk, therefore investing in mutual funds is generally considered to have lower risk than direct investment.

What are the risks in MFs?

Before you decide to invest in mutual funds, there are a number of risks (both general and specific) that you must be aware of. Some of these risks are Market Risk, Credit Risk, Interest Rate Risk etc. however different funds will have respective risks associated with them. For a full explanation of such risks, you must refer to the scheme documents SAI (Statement of Additional Information), KIM (Key Information Memorandum), SID (Scheme Information Document) and the addendums of the respective scheme. An investment in a mutual fund scheme is not a guaranteed investment. Their unit prices (NAVs) and the income from them, are not fixed. This means that the value of your investment may be less than what was originally invested. 

Do all MFs have the same risks?

No they do not. Some mutual funds have been designed for investors who are cautious, while others for those who are aggressive in their outlook towards risk. There are also funds for investors having a balanced outlook towards risk. You therefore need to understand the level of investment risk that you are willing to take, and then choose a mutual fund scheme, which matches your appetite for risk. The risk rating of mutual funds can change over time. We have mechanisms that can help you to understand your risk appetite, and also the risk rating associated with different funds.

Is there a currency risk associated with investing in MFs?

Currency risk is not associated with all the MF schemes. This risk is associated with only those MFs which can invest in overseas markets.

What are the different fees and charges related to mutual funds? And how do they impact my mutual fund investments?

Different charges are applicable to different types of mutual fund schemes depending on the investor activity and the type of underlying securities involved. Charges may change from time to time based on revision in regulatory and the internal guidelines of the mutual fund distributor. The main types of charges are mentioned below, however you must refer to the Scheme Information Document of the fund to know the charges applicable to that particular fund.

  • Initial charges - These expenses are incurred by the AMCs for the scheme(s) before/during the launch towards marketing, publicity, advertising, registrar’s expenses, brokers’/agents’ commission etc. These expenses are not levied separately, but adjusted in the NAV of the fund.
  • Total Expense Ratio (TER) - These are charges towards the annual management of the scheme, including investment management, marketing, investor communication, registrar’s expenses and other expenses directly attributable to the scheme. These expenses are also adjusted in the NAV of the fund.
  • Exit Charges/exit loads - Although described as a charge this is really a penalty for early encashment which is applied by the mutual fund. This charge is deducted from the proceeds of the fund being exited by you. Exit charges vary from scheme to scheme and you have to refer scheme specific documents (namely the Statement of Additional Information (SAI)/Key Information Memorandum (KIM)/Scheme Information Document (SID) and addendums) before investing. 
  • Bank Charges – These charges pertain to the wealth management services offered by The Hongkong and Shanghai Banking Corporation Limited, India (HSBC). A tariff card, indicating the Bank Charges for different services/ activities, is available with the HSBC Relationship Manager (RM) and also mentioned on the Letter of Instruction (LOI). Further, the tariff levied by HSBC is displayed on HSBC’s website on www.hsbc.co.in/investments/

All the above charges or any other charges as might be applicable are subject to change. Please refer to the Statement of Additional Information (SAI)/Key Information Memorandum (KIM)/Scheme Information Document (SID), addendums of the relevant mutual fund scheme and all the relevant documents such as the tariff card to know the exact details.

What is the effect of these charges?

The TER and Bank Charges will have the effect of reducing the overall returns you receive either in the income you receive or the capital growth you experience. This TER is deducted from the overall value of the fund irrespective of whether the mutual fund scheme has made a profit or not therefore deduction of the TER can also increase the loss, the mutual fund scheme may have made. Similarly, Bank Charges reduce the overall value of your investment.

The effect of an exit load (where applicable) will be to reduce the actual amount you receive on encashment, which means you will receive less than the market value of the underlying investment. In case of redeeming and re-investing in funds of the same mutual fund company, you need to consider the 'Switch' option which is generally a cost-effective way to transact as there may be no need to pay the applicable exit load to the mutual fund. Furthermore, for a switch transaction within the same asset class of a mutual fund, no mutual fund transaction charges are payable to HSBC India. Investors must read all scheme information documents to know switching charges and exit loads before investing as the same may vary from one scheme to another. Investors much also refer to the bank tariff card to be aware of banking charges for every type of transaction they wish to undertake. The tariff card is available with the RM and is also mentioned on the Letter of Instruction, which is a document to be executed for buying, selling, switching of mutual funds through HSBC . The tariff is also displayed on HSBC’s website on www.hsbc.co.in/investments/

If I invest what am I committing to?

You are committing to invest at least the minimum amount, which varies across mutual fund schemes. You also commit to understanding the scheme and its associated risks. It implies that you are agreeable to take a degree of investment risk in return for the possible potential of superior returns, in the full knowledge that this outcome is not guaranteed and that it is possible to make a loss on your investment. With regards to close-ended mutual funds, you commit to stay invested in the fund for the complete tenor of the specific scheme. You should also consider how much you wish to commit to any one type of investment, as over exposure in any particular investment is not recommended.

Can I change my mind and redeem my investments at any time?

No, not always. In the case of close-ended funds, the schemes do not provide a redemption facility until the date of Maturity/Final Redemption date. However, as the units of these schemes may be listed on the stock exchange, investors who wish to exit/redeem before maturity may do so by undertaking a sale transaction through a SEBI registered stock broker. It must be noted that liquidity on exchange may not be readily available. You should also consider the fact that an early redemption may not help you meet your investment objectives. In the case of open-ended funds, you will redeem the funds, however the exit load fee may be levied. A capital gains tax may be applicable, hence you must consult your 
tax advisor before redemption. Also, if the price of the units has lowered, then you will experience a capital loss.

How do I keep track of my investments in Mutual Funds?

The price of mutual fund units or NAV is available through a variety of sources including newspapers, the internet (at www.amfiindia.com) and statements received from the AMC. Customers registered for HSBC’s Personal Internet Banking (PIB) can view these details online through a tool called “Wealth Dashboard” at their convenience. Alternatively you can speak to your RM.

What are the tax implications of investing in Mutual Funds?

You should refer to the specific fund documentation for a detailed understanding of the tax consequences of both the fund itself and any effect that it will have on you personally. HSBC India does not offer any tax advice and we recommend that you consult your tax advisor for complete details on how the tax will affect you personally. The tax benefits and implications mentioned in any marketing material provided by the fund house are as per currently applicable tax laws and are subject to change in future.

Where can I get the information on the markets and various Mutual Funds available in the market?

If you are registered on PIB with HSBC, you can access our tool ‘Wealth Dashboard’. This tool provides you information on the markets and various Mutual Funds available in the market. Alternatively you can contact your RM or nearest HSBC branch for this information.

Can I invest through HSBC?

At HSBC, we offer a range of investment and insurance products for the customer’s consideration with respect to his / her investment objectives, financial situation, risk attitude and specific needs.. Please contact your RM or approach the nearest HSBC branch to undertake the financial goal planning journey with us.

How do I buy/sell investment products through HSBC?

You can place your buy and redemption orders at any of the HSBC branches or through your PIB account. To place orders online, you would need to register on the PIB platform and Retail Investment System (RIS) available on PIB. Please contact your RM or approach the nearest HSBC branch to know more about investing with us.

Will HSBC provide regular statements of my investment to me?

Yes. We provides monthly statements of the investments done through HSBC. As an HSBC customer, you may also access your investment portfolio through PIB, as referred above.

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More Information

Important Information

Terms & Conditions

Issued by The Hongkong and Shanghai Banking Corporation Limited, India (HSBC/Bank). Incorporated in the Hong Kong SAR with limited liability.

HSBC currently offers investment products from third party entities registered and regulated in India. Mutual fund investments are subject to market risks. Please read, the Scheme Information Document (SID), Statement of Additional Information (SAI), Offer document, Key Information Memorandum (KIM) and addendums, as applicable, issued from time to time, carefully before investing.

For the product categories such as Liquid/Cash Fund and Close-Ended Debt Funds (Capital Protection Oriented Plans), excluding Fixed Term Funds/Fixed Maturity Plans, the Bank only distributes products from HSBC Mutual Fund (HSBC MF) and does not offer products from other mutual fund houses. The Bank does not conduct any due diligence on the products of HSBC MF, as the same are a part of the HSBC Group and are governed by internal parameters. As regards other third party investment products offered by the Bank, the same are researched by a team based on various internal product parameters.


HSBC does not distribute wealth management products to those persons who are either the residents or citizens of United States of America (USA), Canada, Australia or New Zealand or any other jurisdiction where such distribution, publication, reproduction, availability or use would be contrary to law or regulation

Insurance is the subject matter of solicitation. HSBC (IRDAI Regn. no. CA0016) whose registered office is at 52/60, M. G. Road, Fort, Mumbai 400 001, is the Corporate Agent of Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited. The Hongkong and Shanghai Banking Corporation Limited, India does not underwrite the risk or act as an insurer.

The contents of this FAQ are only for general information and use. They do not constitute any financial or legal advice and should not be relied upon in making (or refraining from making) any investment decision. Please seek guidance from an independent legal/financial advisor for making any decisions pertaining to your investments.

 

Purchase of the insurance product is purely voluntary and is not linked to availment of any other facility from the bank" to the terms & condition "Insurance is the subject matter of solicitation. HSBC (IRDAI Regn. no. CA0016) whose registered office is at 52/60, M. G. Road, Fort, Mumbai 400 001, is the Corporate Agent of Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited. The Hongkong and Shanghai Banking Corporation Limited, India does not underwrite the risk or act as an insurer.