Mutual funds What Is a Mutual Fund? A mutual fund is a type of investment vehicle consisting of a portfolio of stocks, bonds, or other securities. Mutual funds give small or individual investors access to diversified, professionally managed portfolios at a low price. Mutual funds are divided into several kinds of categories, representing the kinds of securities they invest in, their investment objectives, and the type of returns they seek. Investors typically earn a return from a mutual fund in three ways: Income is earned from dividends on stocks and interest on bonds held in the fund’s portfolio. A fund pays out nearly all of the income it receives over the year to fund owners in the form of a distribution. Funds often give investors a choice either to receive a check for distributions or to reinvest the earnings and get more shares. If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also pass on these gains to investors in a distribution. If fund holdings increase in price but are not sold by the fund manager, the fund’s shares increase in price. You can then sell your mutual fund shares for a profit in the market. SIP, STP, and SWP All are systematic and strategic methods of Investing and withdrawal in Mutual Funds. Individuals can resort to each of the options depending on their requirements. In a nutshell, SIP means a systematic method of investing in Mutual Funds while STP means systematically transferring the money from one Mutual Fund scheme to another. Finally, SWP means withdrawal of funds or redemption of Mutual Fund units in a systematic manner. While the first two terms are related to investment, the third term discusses withdrawal. Systematic Investment Plan (SIP) is an investment route offered by Mutual Funds wherein one can invest a fixed amount in a Mutual Fund scheme at regular intervals– say once a month or once a quarter, instead of making a lump-sum investment. The installment amount could be as little as INR 500 a month and is similar to a recurring deposit. It’s convenient as you can give your bank standing instructions to debit the amount every month. SIP PER MONTH 5000 YEARS 25 RETURNS 12% TOTAL INVESTMENT ₹58,98,480 WEALTH GAINED ₹1,54,79,251 MATURITY VALUE ₹2,13,77,731 SIP PER MONTH 2000 YEARS 30 RETURNS 14% PER ANUM TOTAL INVESTMENT ₹39,43,152 WEALTH GAINED ₹2,10,61,120 MATURITY VALUE ₹2,50,04,272 TYPES OF MUTUAL FUNDS Equity funds. Debt funds. Money market funds. Index funds. Balanced funds. Income funds. Fund of funds. Specialty funds. STEPS WE FOLLOW TO MUTUAL FUND INVESTORS ANALYSE THE CLIENT OBJECTIVE , RISK APPETTIE, GOAL AND TIME HORIZON SELECT THE RIGHT MUTUAL FUND SCHEME EXECUTION MONITORING REVIEW USER FRIENDLY APP TO ENABLE THE INVESTOR ON MANAGING PORTFOLIO ON THEIR OWN.
