What is a Mutual fund?
A mutual fund basically pools the money of investors and then the same is invested in equity market instruments like shares, debentures and other securities etc. Income earned out of the same is shared by the investors (called unit holders) in proportion to the number of units owned by them.
Why Money Plant Consulting as your MF advisor?
Our unique & customized personal
financial makeover System^ aims to provide you:-
- Products of all Asset Management Companies (AMCs)
- Personalized service matching to your unique tastes, needs and requirements
- More than 100 man hours of experience in the financial services spectrum
- An ever expanding network of resources to provide all services at your door step
Mutual funds performance for the last few years (selected schemes)
|
Fund Name
|
1-Year Return (%)
|
3-Year Return (%)
|
5-Year Return (%)
|
NAV
|
|
DSPML T.I.G.E.R.
|
48.63
|
51.29
|
---
|
48.80
|
|
Fidelity Equity
|
29.79
|
---
|
---
|
27.36
|
|
HDFC Top 200
|
38.13
|
41.47
|
53.45
|
148.27
|
|
HSBC Midcap Equity
|
24.83
|
---
|
---
|
24.17
|
|
ICICI Prudential Infrastructure
|
68.07
|
---
|
---
|
30.37
|
|
Magnum Contra
|
38.61
|
48.80
|
65.68
|
51.66
|
|
Magnum Global
|
24.12
|
46.56
|
63.91
|
53.52
|
|
Reliance Diversified Power Sector Retail
|
98.86
|
71.31
|
---
|
70.99
|
|
Reliance Growth
|
41.46
|
47.65
|
66.28
|
382.47
|
|
Reliance Vision
|
36.57
|
40.86
|
54.98
|
244.25
|
|
Sundaram BNP Paribas S.M.I.L.E.
|
48.12
|
38.08
|
---
|
26.69
|
|
Sundaram BNP Paribas Select Midcap
|
29.80
|
46.32
|
61.53
|
117.10
|
|
Tata Infrastructure
|
57.37
|
50.99
|
---
|
36.12 |
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Have a SIP!!!
Systematic investment plan is a mode of regular investment in mutual funds schemes and the same is invested in equity market instruments like shares, debentures and other securities etc. Income earned out of the same is shared by the investors (called unit holders) in proportion to the number of units owned by them.
Four good reasons for investment through SIP:-
- SIP Develops your Investment habit:-
The best way to build a corpus is to stay focused & invest regularly. A few hundreds set aside every month will not affect & pinch your monthly disposable income much and its lot easier to set aside few hundreds every month rather than investing at one shot.
- Wealth creation by the power of compounding: -
One must start investing early in life as to experience what is called the Eighth wonder the power of compounding. To explain with an example. For instance, if you begin an investment plan at age 30 and invest Rs 10,000 a year for just 10 years at 9 per cent a year, and roll over the proceeds until you're 60, you'll get Rs 9.28 lakh on a total investment of Rs 1 lakh. On the other hand, your colleague who begins saving at age 40 and invests Rs 10,000 a year for 20 years at 9 per cent a year will only get Rs 5.58 lakh-on a total investment of Rs 2 lakh. That is, by allowing your money to compound longer, you can be richer than your colleague by Rs 3.70 lakh, although you saved only half as much as he did.
- Rupee cost averaging increases chances of higher returns:-
When we invest the same amount in a fund at regular intervals, we may buy more units when the price is lower. Thus we may reduce your average cost per share or per unit over time. This strategy is called 'rupee cost averaging'. With a sound under-lying strategy and long-term investment horizon approach, rupee cost averaging may generate higher returns.
- Check market volatility & make timing of market irrelevant:-
It is rarely possible to time the markets and predict the future. Systematic Investment Plan makes the volatility of the securities markets work in your favor. As the same amount is invested every month, we end up buying more units when the price is low and fewer units when the price is high. Hence the average unit cost will always be less than the average sale price per unit, irrespective of the market rising, falling, or fluctuating.
Some examples:
HDFC MUTUAL FUND
|
Returns
|
SIP
|
Normal
|
|
5 year
|
41.81%
|
19.39%
|
|
3 year
|
69.28%
|
56.15%
|
|
1 year
|
86.47%
|
47.62%
|
PRU ICICI MUTUAL FUND
|
Returns
|
SIP
|
Normal
|
|
5 year
|
27.60%
|
7.37%
|
|
3 year
|
44.89%
|
35.3%
|
|
1 year
|
54.39%
|
13.89%
|
Why Mutual Funds?
- Expert Knowledge & Convenience: Expert advice in research and tracking the market regularly.
- Time: It saves investor's lot of precious time to track their portfolio on a regular basis.
- Feasibility: Gives lot of flexibility to the investor in terms of investment, redemption and processing.
- Very Low entry barrier: Investor can invest in mutual funds for as low as Rs. 100/-
- Diversification: A well-diversified portfolio can be created with a very small amount of investment
- Liquidity: one can enter and exit the fund (open-ended) depending on his/her discretion
- Tax free returns: Tax free Returns if sold after holding for more than a year.
- Transparency: Fund's NAV and portfolio holdings can be reviewed at regular intervals.
- Professional management: An inexpensive roadway for a small investor to get a full-time manager to create and monitor his portfolio.
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