A mutual fund is a financial intermediary which allows a group of investors to pool in their money with a predetermined investment objective. A qualified fund manager is appointed, who is responsible for investing the pooled money into specific securities and asset classes (usually stocks or bonds).
When you invest in a mutual fund, you buy a share (or portion) of the mutual fund.
We advise and service clients who wish to invest in any mutual fund available in the market. We also provide the platform to buy, sell and monitor your portfolio online.
WHY MUTUAL FUNDS
Mutual Funds offer unique advantages unmatched by most investment vehicles:
Mutual Funds are managed by qualified and experienced professionals who have access to company research reports, research analysts, critical and timely market information.
Mutual Funds help diversify your portfolio and therefore reduce your overall investment risk. To achieve a comparable diversified equity portfolio, you would not only require a lot of cash, your risk is also completely dependent on how those particular companies perform. Mutual funds offer you diversification across and within specific asset class.
Speedy access to your money:
Investors in open-ended mutual funds can buy and sell units at Net Asset Value (NAV) which is declared on a daily basis.
Minimum amount required to in a mutual fund is very low. For that amount, you still own a diversified portfolio,
Equity Linked Savings Schemes (ELSS) offer tax rebates to investors under Section 80C of the Income Tax Act. Also, Capital Gains from the above Mutual Funds are tax-free in the hands of the investor.
Mutual Funds buy and sell large amounts of securities at a time, thus help reducing transaction costs. Also, Mutual Funds in India have No Entry Load.
Entire portfolio of the Mutual Fund scheme is disclosed to investors on a regular basis. One of the few transparent investment vehicles available in the market today.
Regulated for investor protection:
The Mutual Fund industry is regulated by Association of Mutual Funds of India (AMFI) in order to safeguard investors' interest.
It is more famously known as SIP. It is bit by bit systematic investment. Under this plan your investments are staggered. That is you invest a fix sum either monthly or quarterly in a mutual fund. Say, for example, you commit to invest a pre-specified amount (Rs 500 onwards) every month or every quarter in a mutual fund. You fix a date on which every month or every quarter the amount gets invested. The first investment has to be by a cheque and then you can either give post dated cheques (PDCs) or opt for electronic clearing system (ECS).
In ECS you give permission for the amount to be directly deducted from your bank account on the fixed due date. The units are allocated as per the then prevailing NAV on that day of the month. You get more number of units if the NAV is low and vice versa if the NAV is high.
Rupee cost averaging
It means averaging the cost price of your investments.
SIP helps in averaging the cost as equal amount is invested regularly every month at different NAVs. SIP works well in a volatile market as in the months where markets are down you get more number of units as the NAV is down and when the markets are up you get less number of units. But over all the prices gets averaged out.
Let us see how: Say you make your first investment of Rs 1,000 at a NAV of Rs 10. In this case, the units acquired will be 100 (1,000/10). You make the next investment of Rs 1,000 at a NAV of Rs 12. Units acquired now will be 83.33333 (1,000/12). Now also suppose that you make the third investment of Rs 1,000 at a NAV of Rs 9 and the units acquired will be 111.1111 (1,000/9).
The average purchase cost works out to Rs 10.19 (3,000/294.4444).
This concept, however, may not work in a rising market. As the markets are constantly rising you acquire less and less units and the average cost does not work in our favour. This is especially true in the shorter period. But in the long term scenario the market is volatile, the cost is averaged out and the downside risk is protected.
Which was the First Mutual Fund to be set up in India?
Which are the other institutions that have floated Mutual Funds in India?
Why has the concept of mutual funds taken so long to pick up in India?
What is the Regulatory Body for Mutual Funds?
Why should I choose to invest in a mutual fund?
How do mutual funds diversify their risks?
Can mutual funds be viewed as risk-free investments?
What are the risks involved in investing in mutual funds?
What are open-ended and closed-ended mutual funds?
Do both open-ended and closed-ended funds come out with an initial offering?
Is the purchase and redemption in case of open-ended funds done at the NAV?
What is the investor’s exit route in case of a closed-ended fund?
How do I invest money in Mutual Funds?
Can I download the application form directly from the Poddar Financial Services website?
What are the parameters on which a Mutual Fund scheme should be evaluated?
What are the different funds we currently have in India?
What are the different types of plans that any mutual fund scheme offers?
Which plan should I choose?
What is a Systematic Investment Plan and how does it operate?
What are the benefits of s Systematic Investment Plan?
What is NAV and how it is calculated?
Like IPOs, can there be any situation wherein I am not allotted the units applied for in the initial offer?
How do I get the information regarding the forthcoming schemes of different mutual funds?
Can a Mutual Fund assure fixed returns?
How much return can I expect by investing in mutual funds?
What is the difference between mutual funds and portfolio management schemes?
How does the concept of entry load work in case of unit purchases?
How does the concept of exit load work in case of unit redemptions?
Can an investor redeem part of the units?
Say I redeem and buy and do likewise several times then, how do I keep track of my portfolio?
What are the broad guidelines issued for a MF?
Am I eligible for rebate on income tax by investing in a MF?
Do investments in mutual funds offer tax benefit on capital gains?
What is the difference between Section 54EA and Section 54EB as far as capital gains tax exemptions are concerned?
Can I claim tax exemption under Section 88 and Section 54 for the same investment?
Do mutual fund investments attract wealth tax?
If I gift mutual fund units, does it attract gift tax?
Is my income from mutual funds exempt from income tax?
What are my major rights as a unitholder in a mutual fund?