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investors at large and offer to sell and buy back its shares on a continuous basis and
use the capital thus raised to invest in securities of different companies. In this you
amount is invested in different companies according to percentage ratio.
Below are our best reading on mutual fund:
Friends In case of mutual funds, the investments of different investors are pooled
to form a common investible corpus and gain/loss to all investors during a given
period are same for all investors while in case of portfolio management scheme,
the investments of a particular investor remains identifiable to him. Here the gain
or loss of all the investors will be different from each other.
Invest for long term in mutual fund SIP for more profit.
What is meant by long term investment? Does it mean that buying at any price and
wait for 3-4 years? Think twice. Give importance to Value; Give importance to
Growth; Give importance to Price; these values are much more important statistics
than Investment duration.
MUTUAL FUNDS FAQS
Fund Management
What is the difference between an open ended and close ended scheme?
Open ended funds can issue and redeem units any time during
the life of the scheme. Close ended funds cannot issue new units
except through a bonus or rights issue. Hence, unit capital of
open ended funds can fluctuate daily. Further, new investors to an
open ended fund can join the scheme by directly applying to the
mutual fund at applicable Net Asset Value-related prices. In the
case of close ended schemes, new investors can buy units only
from the secondary market
Investment Objective
Investment methods
Other services
What is the Net Asset Value (NAV)?
The net asset value (NAV) is the market value of the fund's underlying securities. It
is calculated at the end of the trading day. Any open-end funds buy or sell order
received on that day is traded based on the net asset value calculated at the end of
the day. The NAV per units is such Net Asset Value divided by the number of
outstanding units
NAV = - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Units Outstanding
A mutual fund may receive dividend or interest income from the securities it owns;
it is required to pay out this income to its investors. Most open-end funds offer an
option to purchase additional shares with the dividends. Dividends are often made
monthly or quarterly, though many funds make distributions only yearly
Equity Funds are open to market risk i.e. there is a possibility that the price of the
stocks in which the Fund has invested may decrease. Of course, the prices may
also go up, making it possible for the Fund to earn profits
Debts Funds are open to two main risks - Credit Risk and Interest Rate Risk. Credit
Risk refers to the possibility that the company that has issued the bond or
debenture in which the Fund has invested may default on interest or on principal
payments. Debt Fund managers take care of this by investing in bonds which have
good credit rating
Interest Rate Risk refers to the possibility that the price of the bond in which the
Fund has invested may go down because of an increase in the interest rates in the
economy. In general, it is useful to remember that this is a "see-saw" relationship -
bond prices (and therefore, NAV) goes up when interest rates drop and drops when
interest rates rise
Some mutual funds have floated "assured" return schemes that guarantee a certain
annual return. At present, there are very few funds who assure returns as they have
realized that it is not possible to assure returns in a volatile market next, you can
make a profit by selling the mutual fund units at a price higher than that at which
you bought them. This is capital gain. (If you sell the units at a lower price, you
make a capital loss.)
Finally, the value of the units you hold can appreciate. This is unrealized capital
gain. Dividends and capital gains are treated differently
What are the tax benefits for investing in mutual fund units?
Mutual Funds can meet the investment objectives of almost all types of investors.
Younger investors who can take some risk while aiming for substantial growth of
capital in the long term will find growth schemes (i.e. funds which invest in stocks)
an ideal option
Older investors who are risk-averse and prefer a steady income in the medium term
can invest in income schemes (i.e. funds which invest in debt instruments).
Investors in middle age can allocate their savings between income funds and
growth funds and achieve both income and capital growth. Investors who want to
benefit from regular savings, save a small sum every month, can use the
Systematic Investment Plan
Mutual funds are meant for small investors. The prime reason is that successful
investments in stock markets require careful analysis which is not possible for a
small investor. Mutual funds are usually equipped to carry out thorough analysis
and can provide superior returns
What Mutual Fund do with investor's Money
Now today question is that What does a Mutual Fund do with investor's
money?Before answering on that I want to show some best article that are based on
mutual fund.
Mutual Funds are financial intermediaries. They are companies set up to receive
your money, and then having received it, make investments with the money Via an
AMC. It is an ideal tool for people who want to invest but don't want to be
bothered with deciphering the numbers and deciding whether the stock is a good
buy or not. A mutual fund manager proceeds to buy a number of stocks from
various markets and industries. Depending on the amount you invest, you own part
of the overall fund.The beauty of mutual funds is that anyone with an investible
surplus of a few hundred rupees can invest and reap returns as high as those
provided by the equity markets or have a steady and comparatively secure
investment as offered by debt instruments.
A Mutual Fund invests the pool of money collected from the investors in a range of
securities comprising equities, debt, money market instruments etc. after charging
for the AMC fees. The income earned and the capital appreciation realised by the
scheme, are shared by the investors in same proportion as the number of units
owned by them.Anybody with an investible surplus of as little as a few hundred
rupees can invest in mutual funds. The investors buy units of a fund that best suits
their investment objectives and future needs. A Mutual Fund invests the pool of
money collected from the investors in a range of securities comprising equities,
debt, money market instruments etc. after charging for the AMC fees. The income
earned and the capital appreciation realised by the scheme, are shared by the
investors in same proportion as the number of units owned by them.
Concept of Mutual Funds
Today we will talk about mutual fund basic, I want to show in detail about concept
of mutual fund.
1. A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal.
2. The money thus collected is then invested in capital market instruments such
as shares, debentures and other securities.
3. The income earned through these investments and the capital appreciation
realised are shared by its unit holders in proportion to the number of units
owned by them.
4. Thus a Mutual Fund is the most suitable investment for the common man as
it offers an opportunity to invest in a diversified, professionally managed
basket of securities at a relatively low cost.
Every Mutual Fund is managed by a fund manager, who using his investment
management skills and necessary research works ensures much better return than
what an investor can manage on his own.
When an investor subscribes for the units of a mutual fund, he becomes part owner
of the assets of the fund in the same proportion as his contribution amount put up
with the corpus (the total amount of the fund). Mutual Fund investor is also known
as a mutual fund shareholder or a unit holder. Any change in the value of the
investments made into capital market instruments (such as shares, debentures etc)
is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the
market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a
scheme is calculated by dividing the market value of scheme's assets by the total
number of units issued to the investors. Example:
Mutual fund: Mutual funds are investment companies that pool money from
investors at large and offer to sell and buy back its shares on a continuous basis and
use the capital thus raised to invest in securities of different companies. In this you
amount is invested in different companies according to percentage ratio.
Mutual funds can be either or both of open ended and closed ended investment
companies depending on their fund management pattern. Read detail article about
what is mutual fund. Below are available on best reading about mutual fund.
There are several benefits from investing in a Mutual Fund (Advantage of Mutual
Fund).
Small investments : Mutual funds help you to reap the benefit of returns by a
portfolio spread across a wide spectrum of companies with small investments.
Such a spread would not have been possible without their assistance.
Liquidity : Closed ended funds have their units listed at the stock exchange, thus
they can be bought and sold at their market value. Over and above this the units
can be directly redeemed to the Mutual Fund as and when they announce the
repurchase.
Choice : The large amount of Mutual Funds offer the investor a wide variety to
choose from. An investor can pick up a scheme depending upon his risk / return
profile.
Regulations : All the mutual funds are registered with SEBI and they function
within the provisions of strict regulation designed to protect the interests of the
investor.
A Mutual Fund is not an alternative investment option to stocks and bond; rather it
pools the money of several investors and invests this in stocks, bonds, money
market instruments and other types of securities.
A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is then invested in
capital market instruments such as shares, debentures and other securities. The
income earned through these investments and the capital appreciation realised are
shared by its unit holders in proportion to the number of units owned by them.
Thus a Mutual Fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed basket of
securities at a relatively low cost
NAV
Net Asset Value (NAV) is the actual value of one unit of a given scheme on any
given business day. The NAV reflects the liquidation value of the fund's
investments on that particular day after accounting for all expenses. It is calculated
by deducting all liabilities (except unit capital) of the fund from the realisable
value of all assets and dividing it by number of units outstanding.
The mutual fund company adds up all the stocks they own in the mutual fund,
subtracts their expenses, and divides by the number of shares outstanding. This is
the NAV.Many sites on the web show expense ratios for mutual funds. The lower
the expenses, the more of your money you get to keep!
Asset Management (mutual Fund) Companies allocate units against the money
invested by us. NAV is the value of 1 unit allocated. The NAV increases when the
shares (stocks) held by the Asset Management company appreciate and vice-versa.
NAV is calculated on daily basis and can be described as the (total value of the
assets under the scheme minus the expenses) divided by the total number of units
allocated under the scheme.
For example, if a fund has assets of 50 Crore Rs and liabilities of Crore Rs, it
would have a NAV of 40 Crore Rs.This number is important to investors, because
it is from NAV that the price per unit of a fund is calculated. By dividing the NAV
of a fund by the number of outstanding units, you are left with the price per unit. In
our example, if the fund had 4 Crore shares outstanding, the price-per-share value
would be 40 Crore divided by 4 Crore which equals 10 Rs.This pricing system for
the trading of shares in a mutual fund differs significantly from that of common
stock issued by a company listed on a stock exchange. In this instance, a company
issues a finite number of shares through an initial public offering (IPO), and
possibly subsequent additional offerings, which then trade in the secondary market.
In this market, stock prices are set by market forces of supply and demand. The
pricing system for stocks is based solely on market sentiment.
Friend market is moving down side and now some mutual company are in
loss.They want to make money also when any customer exit from mutual fund but
this is not a good way. I do not know but there are too much reason behind it.
Because all mutual fund companies are not getting enough profit and this is one of
the reason for increasing exit load in mutual fund.
Every one do not know about exit load in mutual fund, I want to describe exit load
first.
Just like entry load some funds impose a fee when you leave the scheme, i.e.,
redeem your units, called the exit load. Exit load is charged at the time of
redeeming (or transferring an investment between schemes).
Now In order to plug redemption, ICICI Prudential Mutual Fund has increased the
exit load on some of its fixed maturity plan (FMP) schemes for prospective
investors from two per cent to as much as five per cent.
Most debt fund managers, industry sources said, are likely to similarly increase the
exit load on their FMPs in order to stem mass withdrawals in the future.
Mission is clear all mutual fund companies are going to increase their exit load but
I would like to tell you that if you are long term investor and investing per month
in stock market and mutual fund then why exit from mutual fund.
Hold all your mutual fund because at this level if you sell them then you would be
in great loss hold all investment and keep investing. Now don't get too hassled
about loads. Best thing to do when a scheme imposes a new load, is not to invest
more money if the load charged is unreasonable.
his are top 5 stock at this time you must buy.
• ONGC
• BHEL
• Jaiprakash Associates
• RPL
• State Bank Of India
• Chambal Fertilisers
SIP adavntages
What is SIP?
SIP: SIP means Systematic Investment Plan. It is not a type of mutual fund. It is a
method of investing in a mutual fund. SIP allows the investor to buy units on a
given date every month. The investor decides the amount and also the mutual fund
scheme. I want to say that save 1 rupee daily then after 30 days you will got 30
rupee. For saving money we need to follow some method and SIP is one of them.
Another advantage of investing through mutual funds is that even with small
amounts we are able to enjoy the benefits of diversification. Huge amounts would
be required for an individual to achieve the desired diversification, which would
not be possible for many of us.
3. Its well-regulated
The mutual fund industry is well regulated both by Sebi (Securities and Exchange
Board of India) and AMFI (Association of Mutual Funds in India). They have, over
the years, introduced regulations, which ensure smooth and transparent functioning
of the mutual funds industry. You can change mutual fund time by time, switch in
different mutual fund, this is one of the big profit.
With SIP we can invest small amounts (Rs 500-Rs 1,000) periodically in Mutual
funds as against larger one-time investment required, if we were to buy directly
from the market. In this way, an investment does not appear to be a burden every
month.
Secondly to prevent losses in volatile markets, investing in Sips is the best option
as every month you may get an opportunity to buy at lower levels.
The investments we make are ultimately for some objectives such as to buy a
house, children's education, marriage etc. And many of them require a huge one-
time investment.As it would usually not be possible raise such large amounts at
short notice, we need to build the corpus over a longer period of time, through
small but regular investments. This is what SIP is all about. Small investments,
over a period of time, result in large wealth and help fulfill our dreams &
aspirations
Mutual fund: Mutual funds are investment companies that pool money from
investors at large and offer to sell and buy back its shares on a continuous basis and
use the capital thus raised to invest in securities of different companies. In this you
amount is invested in different companies according to percentage ratio.
Mutual funds can be either or both of open ended and closed ended investment
companies depending on their fund management pattern.
• Lowest per unit investment in almost all the cases start for Rs 10 in INDIA
• Your investment will be managed by professional money managers so you
need not worry about your money.
• You can merge from one fund to another fund.
• Easy earning opportunity in share market.
• For long term they will provide good result.
• Your investment will be diversified
• Simply one line show you that mutual fund investment is depend on market
risk please read offer document carefully before investing means market
down mutual fund down.
• Mutual funds are like many other investments without a guaranteed return so
it is not necessary you will get profit from mutual fund.
What is SIP?
SIP: SIP means Systematic Investment Plan. It is not a type of mutual fund. It is a
method of investing in a mutual fund. SIP allows the investor to buy units on a
given date every month. The investor decides the amount and also the mutual fund
scheme. I want to say that save 1 rupee daily then after 30 days you will got 30
rupee. For saving money we need to follow some method and SIP is one of them.
There are two ways in which you can invest in a mutual fund.
In my previous article I show the difference between mutual fund and post office
fix deposit.
• If you invest directly in the fund, you just hand over the cheque and you get
your fund units depending on the value of the units on that particular day.
Suppose you invest Rs 10000 and NAV on that date is Rs 10.
• So you will get 1000 units (Rs 10000 / 10).
• If after one year fund NAV is 11 then you value is 11,000 (Rs 11*1000)
• This is referred to as a SIP.That means that, every month, you need to invest
some money suppose you are investing Rs 1000 per month for three month
and at the end of three month your total invests will 3000.
• Let's say the NAV on the day you invest in the first month is Rs 10, you will
get 100 units (Rs. 1000/10).
• The next month, the NAV is Rs 20. You will get 50 units (Rs. 1000/20).
• The following month, the NAV is Rs 40. You will get 25 units (Rs. 1000/40).
• Now total amount invested 3000, total unit you got 100+50+25=175 unit.
• Current NAV of mutual fund is 41 then your current value is 175*41= Rs
7175.
What is NAV?
NAV: NAV is net asset value of a mutual fund. NAV, is the sum total of the market
value of all the shares held in the portfolio including cash, less the liabilities,
divided by the total number of units outstanding. Thus, NAV of a mutual fund unit
is nothing but the 'book value.
Note: Liquid funds, cash funds and floating rate debt funds do not offer an SIP.
These are funds that invest in very short-term fixed-return investments. Floating
rate debt funds invest in fixed return investments where the interest rate moves in
tandem with interest rates in the economy (just like a floating rate home loan).
All types of equity funds (funds that invest in the shares of companies), debt funds
(funds that invest in fixed-return investments) and balanced funds (funds that
invest in both) offer a SIP.
This is common question on investor mind for deposit money so the answer is:
Both the options are good it depends on your risk appetite and the expected returns
from your investments. If you are a high risk taker and expect higher returns from
your investments; then you can go for Mutual Funds. If you are a low risk taker
and expect capital safety in any circumstance then go for Post office FDs.