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 invested by the fund manager in different types of securities depending upon the objective of the scheme.
Principles of Investing in Mutual Funds:
Learn before you begin
If you want to build an investment portfolio to achieve your goals throughout your lifetime, you will need to learn the basics. It is very important to understand the investment philosophy of the fund and ensure that it gels well with your investment objective.
Regular & Disciplined Approach
This will go a long way in achieving your long-term investment objectives. Regular investments in mutual funds provide an easy way to grow your investment over time, taking advantage of market cycles and ensuring that your investment programs stays on track. And it's a good time habit to form.
Diversification
Spread your Investments over various Mutual Funds and different schemes within them. By doing so, you increase the chances of averaging attaining an above average return and also spread your risk.
Think Long Term
Give your investments time. Do not expect short-term gains from Mutual funds. Also do not expect superb performance from your fund every year.
Advantages of Investing in Mutual Funds:
Portfolio diversification
Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own.
Tax benefits
Dividends given by equity oriented mutual funds are tax-free in the hands of the investor. In case of Debt funds, the funds pay dividend distribution tax.
Flexibility
Mutual fund offers features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience.
Flexibility
In open-end schemes, the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock exchange at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV related prices by the Mutual Fund.
Professional Management
Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme.
Low Costs
Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors.
Nayan M. Vala is actively involved in marketing of various mutual fund products:
To assist you in selecting an appropriate mutual fund product to suit your needs call us.
SIP (Systematic Investment Plan) :
It is a way of investing in mutual funds similar to recurring deposits whereby one can invest a minimum amount every month. the units are purchased every month depending upon their Net Asset Value (NAV) at that time.
Disclaimer : This document is for information only and is not intended as an offer or solicitation to buy or sell securities. Whilst considering the information to be reliable we take no responsibility for individual investment decision based thereon. Our firm or a connected company, their clients and officers may have a position or may be engaged in any of the securities or investments mentioned.
