When it comes to investing the money in a financial instrument, the focus is not only on the earnings you can make but also the safety. And when it is about mutual fund investments, which are market-linked, there can be risks of varying degrees. While for some, equity mutual funds can be the best bet. But many may not find them appealing. Different investors have different risk-taking capacities, which actually dictate their investment style. So, the definition of best mutual funds can vary across the classes of investors. Therefore, I have chosen the moment to elaborate on the best mutual funds for different investors. Risk-savvy Investors For people with a greater risk-taking ability, the equity mutual funds are the best investment they can opt for. These funds invest in a wide range of equity and equity-related instruments to raise the value of your investment. The investment objective of these funds is primarily to build the capital as the time moves along. The risk factor in these investments can be extremely high as the subdued market movement can erode the value of your investment. But if your investment horizon is long, say 10-15 years, the risks get averaged out and the investment value grows substantially higher. Investors with Low-Risk Appetite Retirees or investors with lower risk-taking ability can take advantage of the stable income generation plans of debt mutual funds, which invest in a myriad of debt securities such as bonds, monthly income plans, and others. The prime motto of these funds is to ensure the safety of the investment. So, if you have a low-risk ratio, these funds are the ones you should subscribe for. Moderate-Risk Investors Investors who have a moderate risk ratio can opt for balanced funds to start off their mutual fund journey. Balanced funds, which invest in both equity and debt instruments in different proportions, aim to appreciate the invested capital and ensure safety at the same time. Balanced funds can be debt or equity oriented. While the debt oriented funds would mostly like to put your money in debt instruments, equity oriented ones would invest predominantly in equity and equity-related securities. Investors Looking for Liquidity If you are looking for investments that can offer higher liquidity, the answer lies with liquid funds that invest in instruments with a very shorter maturity period, typically ranging upto 3-6 months. Fixed Maturity Plans (FMPs), treasury bills, call money and government securities are the investment area of liquid funds. Above funds are based upon your risk profile and wants. But it’s important to know your risk profile at the same time. Do you know the ways to assess the risk profile? If ‘No’, then read the below points carefully. Present Situation- The present circumstances such as your amount & sources of income, assets & liabilities, age, dependents, and the capital ready for investment also influence your risk appetite. Past Experience- Your approach to a mutual fund investment could well depend upon the experience you would have had earlier. Using that experience, you can judge your risk profile. Investment Attitude- But it’s the behavioural traits of investors that ultimately dictate the choice of mutual funds. If you are comfortable bearing short-term losses for higher gain in the long-term, it would mean a higher risk-taking ability on your part. Else, your risk capacity is either moderate or low. The choice of mutual fund investments would also be influenced by the investment goals you may have set for yourself to accomplish over a period of time. Commonly, investors have the following goals to achieve through mutual fund investments.
To achieve a maximum of the goals stated above, it can be easily inferred that the best route is to invest in equity funds that aim to appreciate the invested capital. If you are in for a long haul, equity funds can make your life better. I hope you now know your risk profile and the best funds for yourself to sail through in your investment journey. Do not pick funds without assessing your risk profile as it can put you in a state of bother. Article Source: https://goo.gl/4M9uLl
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Do you want to buy online mutual fund but don't know how to go by it? Before that, it's better for you to understand about its benefits of online investment. You may be little concerned about the online transaction. But the online transaction is not easy for everyone. There involve technicalities which you should be aware of beforehand. As you may be doing the online transaction by sitting in front of your laptop or mobile, the mutual fund online shouldn't let you shirk the benefits that online transaction carries. Let's take a glimpse of benefits in detail : Free from paperwork The first major benefit that comes to you by investing in the online mutual fund is getting rid of physical strains of the paperwork wherein you are required to manually fill up forms, make a cheque, and comply with the KYC norms. While doing online investment, you just have to ensure your KYC is in place and thereafter you can make your investments suitably. Convenience Investing in online mutual fund gives you full convenience. You don't have to think about the timings, transport, and availability. The moment you decide to invest, within the click you can select to invest. There are various mutual fund schemes which you will come across your terminal or mobile interface from which you would like to invest. In this way, you will save your time and money both by doing online. Cost of Investing The fair approach of investing in direct mutual funds is going online. Direct mutual funds charge less from you in terms of fund management fees which can, in turn, increase your returns. This difference will become important in the longer run. Easy comparison across several mutual funds By simply making your login ID and password with any portal of mutual fund gives you the facility of independent research. You can assess the performance of various mutual funds scheme at one place which can help you to take a fair decision of choosing the best mutual fund investments scheme to invest. At the same time, you can make the decision for switch or withdrawal subsequently. Easy Tracking of Mutual Fund As an investor, by going online helps you track of your fund performance very easily. Whichever day and time you want you can see the exact present value of your investment, only through some clicks which you make. Redemption or Switching Becomes Easy Online mode can allow you to apply instantly for the redemption or switch of the mutual funds. Hence, it safeguards your precious time when it becomes a concern. In this manner, you may get your money in the account within 2 days of the online request. Mis-selling not allowed Mutual Fund online breach the process of intermediary which may somehow invite chances of mis-selling. Since you may not have access to any agent who can persuade you for the wrong mutual fund scheme. It depends only on your discretion to do your research and decide independently. Investing Online in Mutual Funds There are 4 ways of investing online in Mutual Funds : 1. Website of Any Mutual Fund House Every fund house these days give you the provision of online investment. At any day or at any time you can visit the website of each fund house to ascertain your best pick for the online mutual fund. Merits:
2. Independent Mutual Fund Portals There are other online portals which provide you a platform for investing in any mutual fund scheme of your choice. They also educate you for doing the basic research about the mutual fund schemes. The examples of such fund portals are Fundsindia.com, fundsupermart.co.in, and scripbox.com Merits:
3. Online Brokers The distributors working as share brokers are also involved in mutual fund online transactions. Some of the famous brokers which you may easily encounter online are ICICIdirect, KotakSecurities, ShareKhan, HDFC Securities, Indiainfoline etc. Merits:
4. Bank's Website You may also access the bank's website which also sells the mutual fund schemes, relatively from their group companies. SBI Mutual Fund, HDFC Bank Mutual Fund, Axis Bank Mutual Fund etc. are some examples of bank related mutual funds. Merits:
Article Source: http://wishfinblogs.kinja.com/benefits-of-investing-in-online-mutual-fund-1792706403 Mutual Funds are an ideal way to fulfill the needs of investors as per their financial goal. Therefore, it is recommended to study carefully each and every scheme before initiating any investment. As every asset class covered under mutual funds are exposed to a certain degree of risk. This would clearly be able to give a fair idea to investors for choosing their schemes, depending on their risk taking aptitude. Various types of mutual funds categories are designed to permit investors for selecting a scheme based on their risk taking capacity, the investible amount, their goals and the investment duration etc. Let's take a look at some important mutual fund schemes under the following three classifications subject to the maturity period of investment: Open-Ended : This scheme permits investors to engage in buying or selling the units at any point of time at the prevalent Net Asset Value(NAV). These funds do not restrict on the amount of shares issued by the fund. They offer units for sale without prescribing any duration for redemption. If there is high demand, the fund will continue to issue shares, irrespective of the number of investors involved. One of the prime benefits of the open-ended scheme is the liquidity that these funds provide to investors. Debt/Income: In a debt/income plan, a major portion of the investible corpus becomes directed towards investing in debentures, government securities, and other debt instruments. No matter, capital appreciation is low, this is comparatively low-risk return investment option which is suited for investors seeking a regular income. Money Market/Liquid : Money market schemes invest in short-term debt instruments and aim to provide reasonable returns to investors. This is suitable for those investors who wish to utilize their surplus funds in short-term instruments rather than waiting for some better options. Equity/Growth : Equities are a popular investment choice amongst retail investors. Although it possesses a high-risk in the short-term but investors can aim for capital growth in the long-run. If you are at your initial earning stage and focussing on long-term benefits, growth schemes could be your ideal investment avenue. The following schemes are classified under Equity/Growth plans : Index Scheme : Index scheme is a widely preferable concept in the west. These follow a passive investment strategy where your investments track closely proportionate to the movements of benchmark indices such as Nifty, Sensex etc. Sectoral Scheme: These funds invest in particular sectors such as infrastructure, IT, pharmaceuticals, etc. or segments of the capital market like large caps, mid caps, etc. This scheme offers comparatively high-risk return avenue within the equity framework. Tax-Saving : This scheme offers tax benefits to its investors. These funds are entitled to income tax deductions under Section-80 C of the Income Tax Act, 1961 with a 3-year lock-in period. Tax savings are done under Equity Linked Savings Scheme(ELSS) which offer long-term growth opportunities. Balanced/Hybrid: This scheme permits the investors to enjoy growth and income at periodic intervals. Funds are invested in a combination of both equities and fixed-income securities; the proportion is ascertained in advance and divulged in the scheme related offer document. These are suitable for the cautiously aggressive investors. Closed-Ended: Closed-ended schemes have a fixed maturity period and investors can invest only during the initial launch period referred to as the NFO(New Fund Offer) period. On the contrary to open-ended funds, new shares/units are not created by managers to fulfill the demand from investors but the shares can only be bought (and sold) in the secondary market. Capital Protection: The primary objective of this scheme is to seek protection of the principal amount while striving to deliver equitable returns. These invest in high-quality fixed income securities with a minimal exposure to equities with a stipulated maturity period. Fixed Maturity Plans (FMPs): These are the mutual fund schemes with a pre-defined maturity period. These schemes normally consist of debt instruments which have a maturity period relative to the maturity of the scheme, as a result, earning through the interest portion(known as coupons) of the securities in the portfolio. FMPs are usually passively managed i.e. no involvement of active trading of debt instruments in the portfolio. The expenses which are levied on the scheme, are hence, comparatively lower than actively managed schemes. Interval: Interval schemes operate as a combination of open and closed-ended schemes wherein it permits the investors for trading the units at pre-defined intervals. Article Source: https://article.wn.com/view/2017/02/14/Mutual_Fund_Plans_All_you_Need_to_Know/ Mutual Funds are normally advertised by the companies in newspapers, thereby, publishing the date of the launch of the new schemes. The agents and distributors are then contacted by the investors who wish to invest in those mutual fund schemes. These agents and distributors are available throughout the country work towards furnishing the desired information about mutual funds with the provision of application forms as requested by investors.
Even banks and post-offices are actively involved in providing mutual schemes to investors through the facility of an online subscription. Investors are, therefore, required to equip themselves about the objectives of mutual fund investment which infact directly relates to their financial goals. Cost associated with investing in mutual funds Entry and Exit Load: There are some charges levied by mutual fund companies to float, operate and administer a find. These charges are collected from the investors as a percentage of their total investment which are known as loads. There are two types of loads : entry load and exit load. Entry load and exit load are the charges borne by the investors to enter(purchase) the scheme and exit(redeem) the scheme. Entry load now-a-days are not pertinent on any mutual fund schemes whereas exit load varies from 0.50%-3% subject to the holding period by investors. Fees or Fund Management: The mutual fund company levies a fee which is a small percentage of the fund's total value to manage the investments on the behalf of investors. This amount is basically the fund manager's fee for taking care of all the management procedure related to the mutual fund. The fee is chargeable as a percentage of the fund's value on an annual basis. Expense Ratio : The percentage of total assets levied for administering a mutual fund is known as the expense ratio. As returns from bond funds are similar, expenses become a critical factor while comparing bond funds. Transfer/exchange fee : Investors have to bear the transfer fee at the time of shifting their investment from one mutual fund scheme to another one. Best Way to Invest in Mutual Funds in India- Invest through SIP : Systematic Investment plans are the best options to start investing in mutual funds. Every small amount invested on a monthly basis generates the capacity of giving good returns over a specified period of time. For example : An investor putting ₹ 5000 per month through SIP in equity fund with an annualized returns of 12% can fetch ₹ 25 lakhs in 15 years. Invest based on risk appetite: Investors consider to invest depending on their risk taking capability that would yield higher returns. For example : High-risk appetite investors aim to invest in equity funds, moderate risk appetite investors aim to invest in hybrid funds and low-risk investors prefer investing more in debt related funds. Invest in various categories of funds : In several market scenarios, large cap, mid-cap and small-cap funds perform relatively over a specified period of time. Hence, investors would be able to gain maximum returns by investing in different categories of such funds. Invest in sectors that are expected to outperform : High-risk funds such as sector funds are considered by those who are willing to take high risks. Such sectors have the likelihood to outperform in the near future and investors thus prefer to invest in these funds. For example : Infrastructure funds or banking funds are ideal for the investors having a short-term to medium-term horizon of 3 to 5 years. Invest in funds based on one's financial goal: Lack of understanding about mutual funds can often mislead the investors which in turn, leads to choosing the wrong funds or failure of holding the fund for the longer tenure are some of the mishaps encountered while making mutual fund investment decisions. Investors shouldn't rely upon investing just because a mutual fund scheme has given 100% returns in one year. There exists a likelihood of erosion in the capital amount of an investor in case there is a market crash. It is, therefore, advisable to invest based on the financial goal. Use STP for lump sum mutual fund investments : Investing the lump-sum amount in equity funds is one of the biggest mistakes an investor makes. This may possibly be a good strategy taken towards market corrections. However, when markets are booming or when an investor is unaware of the market's direction, the best strategy lies in investing a lump-sum in short-term debt funds or do STP(Systematic Transfer Plan) to equity funds over a stipulated period of time. By doing SIP to equity fund from debt fund leads to risk minimization of investing a lump sum in the mutual fund. Article Source: http://wishfinblogs.kinja.com/mutual-fund-investment-your-suitable-investment-vehicl-1792291491 A mutual fund is an investment which permits all investors to access a well-diversified portfolio of equities, bonds or other securities wherein each investor has a share in the surplus or deficiency of the fund. The allotted units are issued and can be redeemed as required. The fund's Net Asset Value(NAV) is ascertained each day.
The mutual fund companies receive your money and invest it in the financial markets. It is a suitable mechanism for people who wish to invest but scared of the complexities involved in the markets. The beauty of mutual funds is then only when a person with an investible surplus of a few thousand rupees can invest and realize same returns as anyone else. Mutual Funds can be open-ended and closed-ended. But most people acknowledge all mutual funds to be open-ended, while considering closed-ended funds in another category. Open-Ended Funds: These funds are issued and redeemed their shares at any time. They are sold off at the prevailing NAV from and to the mutual fund, on any business day round the year. It generates a high degree of liquidity to investors. Closed-Ended Funds: These funds come up with a fixed maturity period. An investor has the provision of buying these funds only when New Fund Offer(NFO) gets released in the market. Afterward, the redemption of units is possible only at their fixed maturity date. These funds can readily be liquidated by investors through buying and selling them on the exchange where they are listed. Load: This is a form of an expense which is collected from an investor as a percentage of their total investment made towards the fund purchased or sold, referred to as a load. These are the charges required to be paid by an investor in order to float, operate and regulate a fund. Entry load and exit load are the charges levied on the investors to enter(purchase) the scheme and exit(redeem) the scheme. Entry load now-a-days are not applicable on any mutual fund schemes whereas exit load varies from 0.50%-3% depending on the holding period by investors. Benefits of Investing in Mutual Funds India: Small Investments : Even with small denominations as low as few thousand rupees can be used for investment, which is invested across the markets. Professional Management : The professional experts from financial industries manage the money collected in a mutual fund. They assess the markets for selecting best pick investments that reap better returns to investors. Risk Diversification : An investor with a small amount of money can only be able to invest in one or two stocks/bonds, thus increasing risk. However, a mutual fund will diversify the risk by investing in several sound stocks or bonds. A fund usually invests in companies across a broad range of industries, so this leads to spreading of risk. Transparency : Mutual funds provides a complete picture of the investments made by their several schemes and the proportion invested in each category of asset. The information is acquired by the investors in order to assess the right pick for themselves in order to help them achieve their financial goal. Liquidity : Open-ended funds generate liquidity once it gets sold to mutual funds at NAV based prices based on their exit loads whereas closed-ended funds can be sold on the stock exchanges where they are traded. Choice: The funds can be selected from a vast category of mutual fund schemes. This allows the investors to select the best pick as per their risk and return expectations. Systematic Investment Plan: It is a type of investment scheme provided by several mutual fund companies. An investor can invest a small amount at regular intervals (weekly,monthly, quarterly) into their chosen mutual fund. For a retail investor, SIP provides a disciplinary and passive approach to investing for creating wealth in the long-term. Here, the power of compounding rule works well for building wealth. Since the amount is invested periodically (often on monthly basis), it also minimizes the impact of market volatility. Benefits of SIP over Lump-sum investment:
The returns realized through mutual fund investment can be achieved in the following ways: Dividends: The dividends are earned by the unit- holders through mutual funds. The dividends are distributed from the income generated through dividends on stocks and interest on other instruments. Capital Gains : Investors derive capital gains on mutual funds. If the fund sells appreciated value of securities, it earns capital gains. These capital gains are distributed by most of the funds to investors. Profit from higher NAV: The NAV of the fund increases if there is an increase in the value of fund's assets. This way, investors can make the profit by selling back their units to the fund house. Article Source: https://article.wn.com/view/2017/02/09/Get_Started_Investing_in_Mutual_Funds_India/ |
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