Benefits of investing in a mutual fund?
As an investor, you would like to get maximum returns on your investments, but you may not have the time to continuously study the stock market to keep track of them. You need a lot of time and knowledge to decide what to buy or when to sell. A lot of people take a chance and speculate, some get lucky, most don t. This is where mutual funds come in. Mutual funds offer you the following advantages :
- Professional management. Qualified professionals manage your money, but they are not alone. They have a research team that continuously analyses the performance and prospects of companies. They also select suitable investments to achieve the objectives of the scheme. It is a continuous process that takes time and expertise which will add value to your investment. Fund managers are in a better position to manage your investments and get higher returns.
- Diversification. The cliché, "don't put all your eggs in one basket" really applies to the concept of intelligent investing. Diversification lowers your risk of loss by spreading your money across various industries and geographic regions. It is a rare occasion when all stocks decline at the same time and in the same proportion. Sector funds spread your investment across only one industry so they are less diversified and therefore generally more volatile.
- More choice. Mutual funds offer a variety of schemes that will suit your needs over a lifetime. When you enter a new stage in your life, all you need to do is sit down with your financial advisor who will help you to rearrange your portfolio to suit your altered lifestyle.
- Affordability. As a small investor, you may find that it is not possible to buy shares of larger corporations. Mutual funds generally buy and sell securities in large volumes which allow investors to benefit from lower trading costs. The smallest investor can get started on mutual funds because of the minimal investment requirements. You can invest with a minimum of Rs.500 in a Systematic Investment Plan on a regular basis.
- Tax benefits. Investments held by investors for a period of 12 months or more qualify for capital gains and will be taxed accordingly. These investments also get the benefit of indexation.
- Liquidity. With open-end funds, you can redeem all or part of your investment any time you wish and receive the current value of the shares. Funds are more liquid than most investments in shares, deposits and bonds. Moreover, the process is standardised, making it quick and efficient so that you can get your cash in hand as soon as possible.
- Rupee-cost averaging. With rupee-cost averaging, you invest a specific rupee amount at regular intervals regardless of the investment's unit price. As a result, your money buys more units when the price is low and fewer units when the price is high, which can mean a lower average cost per unit over time. Rupee-cost averaging allows you to discipline yourself by investing every month or quarter rather than making sporadic investments.
- Transparency. The performance of a mutual fund is reviewed by various publications and rating agencies, making it easy for investors to compare fund to another. As a unitholder, you are provided with regular updates, for example daily NAVs, as well as information on the fund's holdings and the fund manager's strategy.
- Regulations. All mutual funds are required to register with SEBI (Securities Exchange Board of India). They are obliged to follow strict regulations designed to protect investors. All operations are also regularly monitored by the SEBI.
SYSTEMATIC INVESTMENT PLAN (SIP)
A Systematic Investment Plan helps you invest a fixed amount regularly at a specified frequency say, monthly or quarterly. SIP is a simple method of investing used across the world. So, what are you waiting for? Start a Mutual Fund SIP today in our range of schemes from as low as Rs. 500/- per month
- Identify your financial goals like buying a house, your first car, marriage, education.
- Set aside and invest a fixed sum of money regularly to meet these financial goals.
- Become a disciplined investor – maintain regularity.
- A SIP will ensure all these for you.
MAINTAIN DISCIPLINE IN YOUR ASSET ALLOCATION
- SIP helps avoid the temptation of jumping from one asset class to another during certain market conditions.
RUPEE COST AVERAGING
By investing a fixed sum at fixed intervals we can buy fewer units when the price is higher and more units when the price is lower. This is called Rupee Cost Averaging.
SIP takes care that your average price works out to be lower than the price you would have paid at the market peak. It takes care that you invest across market cycles. Your average price works out to be lower than investing at the market peak. It helps you avoid the temptation of timing your investments “Market Timing” is best left to professionals.
THE POWER OF COMPOUNDING
Instead of saving a huge chunk of money and investing it in a lump sum investment, it is better to invest regularly in smaller amounts. The reason being while your lump sum investment may attract returns it does not give you the benefit of compounded interest that happens in SIP investment. With an SIP investment your investment grows and also your interest earns interest. To know how power of compounding works click here to see an illustrated table
You can easily enroll yourself for SIP in our leading schemes by just submitting an Auto-debit mandate with the completed enrollment form.
The mutual fund will debit your account on the requested date, credit the units to your account and will send the confirmation for the same.
First Time Investor
1) W.e.f. January 1, 2016, all applicants who wish to purchase units have to be KYC compliant (as per KRA norms) and provide supplementary KYC information. Additionally, non-Individual investors have to submit Ultimate Beneficial Ownership (UBO) declaration form.
2) W.e.f. November 1, 2015, all new applicants who wish to purchase units have to provide certain information required for FATCA/CRS compliance.
Individual investors can submit the information through online mode CLICK HERE
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