Online Mutual Fund Investment
What are Mutual Funds?
Mutual Funds are investment vehicles which collect money from all the investors and invest in bonds, equities and/or money market instruments. These investors share a common objective, as in the kind of instruments the investment has to be made, or the combination of two or more kinds, or on the basis of risk profile. You can start your online mutual fund investment with just Rs. 500!!
This entire pool of money is managed by fund manager. He is the one who strategizes in order to make a particular mutual fund scheme a profitable bet. All these mutual fund scheme charge an expense, upto 1.5% of your invested amount, in order to pay the fund manager, and for their management plus miscellaneous expenses)
The profit or the returns generated from a particular instrument (after deducting the fees), is distributed on the proportionate basis, depending upon the online mutual fund investment amount.
Types of Mutual Funds
Online Mutual Fund Investment Vs Other Investment Options
Broadly, Mutual Funds are divided into three categories: Debt, Hybrid and Equity. These categories are further sub divided into:
 |
 |
 |
| Debt | Hybrid | Equity |
| Liquid Fund | Conservative Hybrid Fund | Index Funds |
| Ultra Short Term | Equity Saving Fund | Large Cap |
| Floater | Multi Asset Fund | Focused Equity |
| Low Duration | Dynamic Asset Allocation Fund | Large & Mid Cap |
| Money Market | Aggresive Hybrid Fund | ELSS |
| Short Term | Dividend Yield | |
| Medium Duration | Value / Contra | |
| Dynamic Bond | Multi Cap | |
| Corporate Bond | Mid Cap | |
| Credit Risk | Small Cap | |
| Banking & PSU | Sectoral / Thematic | |
| Long Duration | ||
| Gilt Fund | ||
Units of Open Ended Schemes can be purchased and redeemed round the year.
However, you can subscribe for closed ended funds only in the initial offer period, and redeem only after the maturity date.
The fund manager of the ‘actively’ managed fund works on the mutual fund portfolio throughout the year, taking decisions like; which stocks to buy, hold and which stocks to let go off in order to maximize returns, and outperform benchmark returns ( at least!). He/ She also has to make sure that the risk capacity of the investors is not compromised in view of generating great returns.
In case of ‘Passively’ managed fund, the fund manager does not reason much when it comes to making investment choices. He/ She simply follows the index.
Mutual Funds are no doubt better than other investment options, mainly because of following reasons:
- Online Mutual Fund Investment offer better returns than traditional investment options
- Mutual Fund investments plans are simple and best modes of investment for those who lack huge amounts of money and/or don’t have time to do research on the financial instruments.
- You can choose from a variety of schemes depending upon your risk profile.
How to grow money with Mutual Funds?
How the mutual fund investment plans perform depends much on the fund manager. Which stocks he chooses for investment, when to hold, when to buy and when to sell – are the important drivers for growth of any mutual fund.
Then there are bunch of other reasons as well; how is the country’s economy doing? And what is the general sentiment in the country?
Further, if an investment has to be done in mutual fund schemes, make sure that the investment is at least for 3 years.
Also there are short term factors like market sentiments, elections, because of which indexes are not stable. Herein lies the opportunity to gain. Because of this very ‘volatile’ nature of market, mutual funds, especially equity mutual funds’ NAV tend to fluctuate.
You can invest when the market is low and redeem when the market is high. This is possible for both normal and online mutual fund investment.
Why you need a Mutual Fund Advisor?
Trusting someone with your hard earned money is difficult indeed.
Choosing the mutual fund investment out of 18000+ schemes can be a very confusing option.
When you are doing normal or online mutual fund investment, the kind of scheme you are putting in your money matters the most. It is extremely important to know how much risk you are ready to withstand, which again depends upon multitude of factors.
Also, with time, portfolio rebalancing is important. How much should be allocated to debt, and how much should be put in equity and with time making sure that the ratio is maintained, is a mountainous task.
Here is where the financial advisor comes in.
A qualified advisor (Certified Financial Planner), are better in money management than non professionals in this area. Your advisor will take care of your money, your taxes, and will be answer to all your questions like where and when to invest?
There are some miscellaneous services for which your advisor is responsible; like change of address, email id’s, capital gains statement, portfolio performance, etc. Not everyone can make their investments alone mainly because of the time constraint or/and the inclination in the research part.
Benefits of Investing in Mutual Fund SIP
There are multiple benefits of Investing in Mutual Funds:-
Achieve Your Financial Goals:
Mutual Funds provide a smarter way for you to invest your money and can easily achieve your financial goals.
Reduced Risk:
Mutual Fund plans provide diversification, through which you can invest in different securities and reduce the risk.
Managed By Experts:
The mutual funds are managed by mutual fund managers, who have deep knowledge and expertise in investing money at the right place. Thus, your money is safe and increasing day by day.
Advantage of Liquidity:
The biggest advantage of mutual fund is being liquid, that means you can easily sell or buy the share anytime you want and take the money or invest in it again.
Start investing from a small amount:
Mutual Fund SIP just start from as low as INR 500. This means, that you can start investing from a low amount and do wealth growth over a period of time.
Save Taxes with Mutual Fund :
SIP Mutual Fund are really tax efficient, in certain mutual funds you can save on taxes by investing in these mutual funds.
Flexible In Nature:
Mutual Fund SIP are really flexible in nature. You have the option to choose from different funds that can work according to your investment horizon, financial objectives and risk profile.
These are the top benefits of investing in mutual funds. So, start investing today.
“Mutual Fund SIP: Secure Your Financial Future”
Systematic Investment Plans or SIPs are the most important way to invest through mutual funds. This helps the investors to invest a monthly sum or a fixed amount regularly. It makes for building a corpus over some time, even if the investor just wants to invest a small amount over some time.
Why Invest in Mutual Fund SIPs:
Mutual Fund SIPs are the smartest way to invest over a long period. They help by providing you with:
- Growing your money over some time through compounding.
- Rupee cost averaging over some time.
- Benefits through professional management & diversification.
- You can develop financial discipline.
- Achievement of long-term financial goals.
How SIP Mutual Funds Work:
The SIP Mutual Fund works based on these principles:
- Regular contributions: Investors invest over some time regularly.
- Net Asset Value (NAV) calculations: The NAV is calculated based on the mutual fund and what it’s priced based on per unit of the fund. This NAV is calculated every day and it directly depends on the market value and the securities.
- Rupee Cost averaging: SIP provides an average of the cost of investment. As the investor buys more of the units when the NAV is low. Whereas buys fewer units when the NAV is high.
