Tag Archives: Mutual Funds in India

What are the benefits of investing in Mutual Funds?

Benefits of Mutual Funds :- Qualified and experienced professionals manage Mutual Funds. Generally, investors, by themselves, may have reasonable capability, but to assess a financial instrument a professional analytical approach is required in addition to access to research and information and time and methodology to make sound investment decisions and keep monitoring them.

  • Since Mutual Funds make investments in a number of stocks, the resultant diversification reduces risk. They provide the small investors with an opportunity to invest in a larger basket of securities. Mutual Funds* The investor is spared the time and effort of tracking investments, collecting income, etc. from various issuers, etc.
  • It is possible to invest in small amounts as and when the investor has surplus funds to invest.
  • Mutual Funds are registered with SEBI. SEBI monitors the activities of Mutual Funds.
  • In case of open-ended funds, the investment is very liquid as it can be redeemed at any time with the fund unlike direct investment in stocks/bonds.

How are mutual funds different from portfolio management schemes?

In case of mutual funds, the investments of different investors are pooled to form a common invertible corpus and gain/loss to all investors during a given period are same for all investors while in case of portfolio management scheme, the investments of a particular investor remains identifiable to him. Here the gain or loss of all the investors will be different from each other.

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Are there any risks involved in investing in Mutual Funds?

Mutual Funds do not provide assured returns. Their returns are linked to their performance. They invest in shares, debentures and deposits. All these investments involve an element of risk. The unit value may vary depending upon the performance of the company and companies may default in payment of interest/principal on their debentures/bonds/deposits. Besides this, the government may come up with new regulation which may affect a particular industry or class of industries. All these factors influence the performance of Mutual Funds.

As mutual fund schemes invest in stock markets only, are they suitable for a small investor like me?

Mutual funds are meant only for a small investor like you. The prime reason is that successful investments in stock markets require careful analysis of scripts which is not possible for a small investor. Mutual funds are usually fully equipped to carry out thorough analysis and can provide superior returns.

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Systematic Investment Plan (SIP)

A systematic investment plan (SIP) is a way to invest in mutual fund regularly. The idea behind this is to set apart the sum of amount every month or periodically and use that corpus to buy unit of the particular mutual fund. It allows investor to invest gradually in small amount, instead of asking for a large chunk of money thereby it inculcates financial discipline to the investor.

SIP may be termed a smart choice of investment for an investor. 

It average out the cost of investment hence reduces the risk. E.g. If invested Rs.1000 every month and the scheme invested in is available at Rs.20 per unit. Then in month 1, will be able to obtain 50 units. And In 2nd month again invested Rs.1000 but this time If the per unit values goes down by Rs. 10. Then will be able to obtain 100 units. So in 2 month one can take benefits of 150 units. But If we invested Rs. 2000 in a month for a particular scheme which is available at Rs. 20 unit, the will be able to obtain 100 unit only.  So it is advisable to small investor that to invest in SIP is more beneficial the any other investment option. As it is reduce the risk and average out the cost to superior returns. 

Reliance Mutual Fund

Reliance Mutual Fund (Photo credit: Wikipedia)

It also allows investor to invest gradually as like as recurring deposit. It can give higher return if invested for long term. One major difference is that short term SIP is more risky so it is advisable to invest in long term SIP. In mostly investment option investor watch the market very carefully to make benefit but SIP not required to watch the market trends, so it is easily acceptable to small investor as well as all category of investor. 

Benefits of SIP- Independent of the market and regular saving habit. Better way of wealth creation. Due to its flexibility it become the more attractive and affordable way of investment in mutual fund through SIP among all category on investor.  

For more information please visit: – http://en.wikipedia.org/wiki/Systematic_Investment_Plan

RR Research provides unbiased and independent research in Stock Market, Equity, Stock Brokers, Commodity Prices, Fixed Income, Currency, Fixed Income Securities, Debt Market, Life Insurance Plans in India, Mutual Funds, SIP Mutual Fund, IPOs, NCD, Fixed Deposits, Equity Shares, Equity Brokers, Tax Saving Schemes, and Insurance Brokers in Delhi. The research is equipped with state of the art analysis tools, software. Know more about FD Schemes in India visit: http://www.rrfinance.com/Fixed_Income/FixedDeposit.aspx

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Currency Market Outlook – The Indian rupee came to High!

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The Indian rupee came off near two-week highs to close lower on Monday, ending a two-day winning streak, as corporate inflows and a strong domestic stock market was outweighed by a late surge in dollar demand from oil importers. Dealers cite inflows related to Unilever’s open offer for Indian unit foreigners bought $189.15 million of shares on Fri, provisional data shows.

RR Financial Consultants‘s insight:

Today’s Headlines

1- Yen Falls as Japan Manufacturers’ Optimism Rises; Krona Advances

2- Bernanke-Draghi Policies MIT Lessons Fischer Says of His Pupils

3- Gilts Drop on Manufacturing, Housing Data; Carney Takes Over BOE

4- U.K. Lenders See Share of Global Banking Profit Fall by Half

5- Macquarie Set for Profit Gain as Australian Dollar Weakens

6- Yuan Rises a Second Day on Easing Cash Crunch, Manufacturing

For detail analysis report please visit: – http://www.rrfinance.com/reserch/MorningBell/Cr_MorningBell.pdf

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English: New Symbol for Indian Rupee

English: New Symbol for Indian Rupee (Photo credit: Wikipedia)

Articles about Indian rupee! Indian rupee snaps two sessions of gains; late surge in importer dlr demand (xe.com)

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What is Monthly Income Plan (MIP) Mutual Fund ?

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RR Financial Consultants‘s insight:

What is a Monthly Income Plan (MIP) mutual fund?

Primarily, MIP of mutual fund is a debt-oriented scheme that generally invests up to 75-80% of its corpus in debt instruments and the remaining in equity instruments. MIPs aim to provide investors with regular pay-outs (though dividends) – although it is not mandatory for the mutual fund scheme as dividends are paid at the discretion of the fund house and subject to availability.

MIP aims to provide reasonable returns on a monthly basis through investment in debt as well as a small portion in equities. They invest predominantly in interest yielding debt instruments (commercial paper, certificate of deposits, government securities and treasury bills). The debt investments ensure stability and consistency while the equity instruments in the portfolio boost the returns. MIPs are market-linked (to the extent of their equity portfolio).

Why to Invest in MIP?

Stable Wealth Creation –These Products offer an extremely attractive risk adjusted return proposition.

Flexibility to investors –MIP schemes has several options catering to the individual needs of the investors:

1. Monthly Dividend Option for an investor needing monthly income.

2. Monthly Payment Plan for investors who do not want Dividend Distribution Tax to be deducted but want a monthly stream of income – unit’s equivalent to the gross dividend per unit as planned in Monthly Dividend Option would be redeemed and paid out to investor.

3. Flexi-Dividend Option for investors seeking dividends from time to time.

4. Growth Option for investors seeking cumulative growth by way of capital appreciation.

Switch Option – MIPs like other mutual fund products does not provide the security of regular dividends as they are governed by the volatility of the market. In such instances, there is a quick fix route that can be adopted in the form of Systematic Withdrawal Plan or SWP. Through this you can opt for a growth option under the same scheme. However, surveys show that inspite of any irregularity the return excels other forms of debt investments.

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