Understand all the basics of Mutual funds

POSTED BY manish ON November 5, 2007 COMMENTS (110)

Lots of people believe in investing their money in traditional investment tools, because of the concern of security. You must have seen your parents investing in FD and RD, which are considered as safe tools of investment. But now a days, lot of investors are choosing a trending tool of investment i.e. Mutual funds.

But before investing in MF, one should know all the basics of mutual fund. Most people still don’t know what is mutual fund. They are not clear about even the basics of MF’s in India as an investment instrument.

Through this article, I will try to answer all the questions related to mutual funds.

Basics of mutual funds

Mutual fund is an advanced, low cost and tax efficient tool of investment.

There are thousands of mutual funds in India which are almost similar to each other and this created confusion among investors; some of the examples of MF’s are Fidelity mutual funds, SBI mutual funds or Reliance mutual funds.

Here is a video on basics of Mutual Funds which will help you understand some facts about MF’s in easy manner. Let’s first understand from very basic which will be helpful of a person totally outside the personal finance space.

To know MF in detail, you must understand all the related factors like what is company, what are shares, how mutual funds are classified etc. So let me explain you each term in detail.

What is Company?

Company is a voluntary association of persons formed for the purpose of doing business having a distinct name and limited liability. These company needs to be registered under The Companies Act, 1956, however, company is not a citizen so as to claim fundamental rights granted to citizens.

What are Shares?

To put in simple terms, it’s a share in a company. So it can be a very minuscule part of ownership in some company.

For Example, if someone has 100 shares of Rs.100 each for Company XYZ, it means that he has invested that much money in that company and is owner for that much part, which is commonly called as “stocks” and “equities.”

As we have got some understanding of what are these terms, we can proceed further:

Now anyone who has good knowledge of Stock markets, good knowledge of analyzing the company performance, buying and selling of shares, timing the market, etc. can directly buy and sell shares and do the investment directly in stock market.

But there are people who have no good understanding of these things and they can’t take good decisions themselves, for them MF comes into picture.

Mutual Funds Pool the money

So, MF is a financial instrument that allows a group of people to pool their money to build a huge corpus, and then this money is invested by group of people (refereed as FUND MANAGERS), who are investment experts, have deep understanding of investing in stock market and overall financial markets.

All the mutual Funds have their Units just like “shares” in Company. So if someone wants to invest Rs.10,000 in ABC MF and price for a unit is Rs.10, he gets 1000 units of ABC MF, and over a period of time as the MF investment grows, the unit price also grows with almost same ratio.

mutual funds

The price of these units is referred as Mutual Funds NAV (Net Asset Value). When a new MF launches, it’s called NFO of Mutual Funds (New Fund Offer, just like IPO in case of new Company’s Share issue to public)

So for example the total corpus of the MF on 1/1/2007 was Rs.100,000,000 and per unit price was Rs.10. and after an year on 1/1/2008 the total investment has grown to Rs.134,000,000, the unit price will be now Rs.13.40 (approx. it may be little less as there are some administrative cost and other expenses to be incurred).

Classification of Mutual Funds

A mutual fund can invest your money in different kind of tools like shares, debentures, gold, Fixed Deposits and cash also. So based on where it will invest and what kind of risk it will take there are 2 different ways of classifying mutual funds.

#1 Open end or Close Ended mutual Funds

One way of classifying mutual funds can be close ended and open ended funds. An open ended mutual fund is open at all time for entry and exit. So one can invest in it anytime and can get out of it anytime.

Whereas, in a close ended fund, there is a specified entry time and exit time and it comes with duration.

mutual funds types

#2. 10 types of Mutual Funds

Mutual funds are categorized on the basis of its objectives, style and strategy. Investing in Mutual Funds only is not enough to get good returns. You should know about the types of mutual funds and then invest in different funds by deciding your goal.

The different types of mutual funds are enlisted below:

  1. Diversified Equity Funds
  2. Tax saving Funds (ELSS)
  3. Balanced Funds
  4. Sectoral Funds
  5. Mid Cap and Small Cap Funds
  6. Index funds
  7. Exchange Traded Funds
  8. Fund of Funds
  9. Debt Funds
  10. Liquid Funds

1. Diversified Equity Funds :

These are those mutual funds which invests across all sectors and diversify their portfolio. They invest in large companies to small companies. Which results in wide diversification. It helps in spreading risk across all sector and return potential is very good.

2. Tax saving Funds (ELSS) :

These are special category of mutual funds which are tax saving funds called ELSS (Equity Linked Saving Schemes). These have a lock in period of 3 years. They are Diversified mutual funds in nature.

3. Balanced Funds :

These are the funds which put money in Equity and Debt in some balanced proportion. Balanced does not mean 50:50 , it may happen that they put money in ratio of 70:30 or 60:20 or may be 80:20 … but the ideal ratio would be 50:50. It depends on market conditions.

In a very fast booming market, a fund with 7:30 mat be a balanced one. And in a bearish market a combination of 50:50 may be considered are an aggressive fund. These funds have low risk and low return capacity in comparison with normal equity funds.

4. Sectoral Funds :

These are Funds which invests all its money in companies of a particular sector or a bunch of sectors related to each others. The reason for this is high faith in the sector for growth and return potential because of which these funds are very risky and have high return potential.

For example: Reliance Diversified Power Fund .

5. Large cap, Mid Cap and Small Cap Funds :

These funds are those funds which invest there money in Mid cap Stocks or small Cap stocks … Mid cap and Small Cap companies are companies categorized by there market capitalization.

  • Large Cap : greater than $10 billion
  • Mid Cap : Between $2 and $10 billion
  • Small Cap : Less then $2 billion

Mid cap and Small Cap stocks are more riskier as they are small compared to large Cap stocks because of size and reachability in market. They also have huge potential for growth so they can give superb returns too. For eg:

“Sanghvi Movers” gave a return of around 4500% in 5 years from 1992 – 1997. An investment of Rs 1 Lac was worth Rs 45 lacs in just 5 years.

In the same period “Jindal Power and Steel” gave return of 20000% . So investment of Rs 50,000 was worth Rs 1 crore in just 5 years.

6. Index funds :

Index Funds are mutual funds which mirrors a particular mutual fund. They Put there money in the companies which are part of that index and in same proportion as per the weightage of the company in that index. For Eg:

Franklin India Index Fund which tracks S&P CNX Nifty Fund will invest in companies in that fund in the same ratio as their weights. Suppose following is the weightage table for index:

Reliance 10%
Infosys 8%
Wipro 8%
…..
…..
Ranbaxy 3%

Then the fund will also invest in these companies stocks in same proportion. The NAV’s of these mutual funds increase or decrease in the same way as the index. if index will grow by 2.4% then NAV will also increase by 2.4% .

7. Exchange Traded Funds :

ETFs are just like Index funds with some differences, ETFs are a mix of a stock and a MF in the sense that

  1. Like ‘mutual funds’ they comprise a set of specified stocks e.g. an index lik Nifty/Sensex or a commodity e.g. gold; and like equity shares they are ‘traded’ on the stock exchange on real-time basis
  2. ETFs are passively managed, have low distribution costs and minimal administrative charges. Hence most ETFs have lower expense ratios than conventional MFs.
  3. Convenient to trade as it can be bought/sold on the stock exchange at any time of the day when the market is open (index funds can be bought only at NAV based on closing prices)

8. Fund of Funds :

These are mutual funds which invests in other mutual funds. They put money in different mutual funds in some proportion depending on their goals and objectives.

9. Debt Funds :

Debt funds are mutual funds which have their major holdings in secure and fixed income instruments like Fixed deposits , bonds . They also put a small proportion in Equity (High risk , high returns). These are secure in nature and provide low returns.

10. Liquid Funds :

Liquid funds are used primarily as an alternative to short-term fix deposits. They invest with minimal risk (like money market funds).

Most funds have a lock-in period of a maximum of three days to protect against procedural (primarily banking) glitches, and offer redemption proceeds within 24 hours. Liquid funds score over short term fix deposits.

 

Watch the video given below to know about mutual funds schemes in detail.

Balanced mutual funds are those funds which invest in both equity and debt in a balanced ratio (like 60:40 or 50:50 for example).

Advantages and Disadvantages of Mutual Funds

Before investing in mutual funds an investor should understand if it suits his requirement of not . Therefore one should go through all the advantages and disadvantages of mutual funds .

Advantages of Mutual Funds

Management: One of the biggest advantage is that in very low cost the investor gets his investment managed by experts. If they want to get the services solely for their investment , it can be very expensive but by investing in MF they can take advantage of the scale.

Scale Advantage : The transaction costs of a single indivisual is very less because mutual funds buy and sell in big volumes.

Diversification : With mutual fund investment your money gets diversified in a lot of things, which helps in minimising the risk factor. Also if one particular sector does’nt perform well the loss can be compensated with profits made in other sectors.

Liquidity and Simplicity : You can sell or buy mutual funds anytime. So mutual funds are good if you want to invest in something which you can liquidate easily . Also MF are very simple to buy and sell .

Disadvantages of Mutual Funds

Risks and Costs: Changing market conditions can create fluctuations in the value of a mutual fund investment. Also there are fees and expenses associated with investing in mutual funds that do not usually occur when purchasing individual securities directly.

No Guarantees: As MF invest in debt as well equities , there are no sure returns . Returns depends on the market conditions .

No Control: Investor does not have control on investment , all the decisions are taken by the fund manager. Investor can just join or leave the show.

I am sure this must have given you a good enough idea of basics of Mutual Funds in India and a general idea of types of mutual funds. In case you have any comments or any query, please leave your message in the comment section.

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110 replies on this article “Understand all the basics of Mutual funds”

  1. Abhinav says:

    What is the best MF for tax planning? Birla Sun Life Tax Relief 96/Axis Long Term Equity Fund
    Although Axis Long Term Equity Fund ELSS(for tax planning) has given good return over year but the AUM has increased/ doubled in recent years and has gone to 10000cr. At this point it only follows benchmark hence would it be wise to still invest in this?

    1. Yea I think you can still invest in the ELSS fund ..

  2. Varsha says:

    Hello,

    I want to invest into Mutual funds through SIP for near about 10-15 years so could you please let me know any good policy so that I can invest in that?

    1. ICICI Pru Balanced Advantage Fund is a good one ! ..

      In case you are new to this, my team can help you with setting up everything from start to end. Just fill up https://www.jagoinvestor.com/start-sip

  3. vishal says:

    hi sir
    i am planning for investments in mutual funds . presently i can afford 5000 -7000 per month via SIP. can u please guide which funds should be best to be considered

    1. Hi vishal

      I can see that you are interested in investing in mutual funds. I want to share that now you can invest in mutual funds with Jagoinvestor as your advisor

      We create a FREE online account for you, from where you can invest and redeem online.

      Our team will be happy to explain you more on this.

      Find more at https://www.jagoinvestor.com/start-sip

      Manish

    2. Hi vishal

      I can see that you are interested in investing in mutual funds. I want to share that now you can invest in mutual funds with Jagoinvestor as your advisor

      We create a FREE online account for you, from where you can invest and redeem online.

      Our team will be happy to explain you more on this.

      Find more at https://www.jagoinvestor.com/start-sip

      ManishHi vishal

      I can see that you are interested in investing in mutual funds. I want to share that now you can invest in mutual funds with Jagoinvestor as your advisor

      We create a FREE online account for you, from where you can invest and redeem online.

      Our team will be happy to explain you more on this.

      Find more at https://www.jagoinvestor.com/start-sip

      Manish

  4. Saurabh says:

    Hi Manish,
    I have SIPs of 10000/- each on each of the following:
    1. Franklin India Small Cap
    2. SBI Magnum Midcap
    3.HDFC Balanced
    4. Franklin India Prima Plus…
    Plus I have units in HDFC Top 200, Franklin India Ulta short bond,UTI Floating rate-STG… I was wondering if you could share the best way to go about Portfolio restructuring…I have some funds in mind like Mirae which I wanted to include in my Portfolio and exiting /stopping some SIPs but I dont want to clutter my portfolio with too many funds, keeping in mind the Capital gains Tax.. Your inputs will be helpful…

    1. I cant reply in detial on this, but I think you good funds for now and mirae is also a good fund house. You can include it

  5. taqiuddin says:

    hello sir,

    I would like to know about rebalancing. I know little that we have to sell and by in funds to rebalance it but i want to know how ..? i mean do i have to sell a equity fund suppose mirea asset fund to rebalance my dept fund ..? this selling and byuing is confusing to me. i hope you understand my problem , waiting for your reply

    1. Yes, you might have to sell some fund and buy another or, You can just buy something else and balance.

      Like suppose you invest like this

      A – Rs 50,000
      B – Rs 50,000

      Now suppose A gained 20% and B lost 20% , it will look like

      A – 60,000
      B – 40,000

      Now the ratio is 40:60 , Now suppose you want to make it 50:50 again, you have 3 choices

      Choice 1 – Sell Rs 10,000 from A and buy B . This way you dont have to put anything from your pocket

      Choice 2 – Sell Rs 20,000 from A . Thats all . This way both will become 40k ,40k

      Choice 3 – Put Rs 20,000 in B , that way both will be 60k

      Manish

      1. taqiuddin says:

        I got what you explaied but as i am a new investor trying to learn and invest through direct mutual fund. In this concept how one is selling the gain Rs 10,000 from a fund..? do i have to exit from the fund..? and reinvest in any other fund ..?

        1. Yes, you will have to exit from the fund for that much amount

          1. taqiuddin says:

            thankyou for answering but i have a doubt , in Choice 1 – Sell Rs 10,000 from A and buy B, this i still didnt get . how one is selling from a fund and buying in . please can you explain, i tried to search but was not able to find the exact answer. hope to get clarity on this .
            thankyou again

            1. taqiuddin says:

              Still waiting for your response please.

            2. When you sell frmo A, you will redeem the units and money will come back to your account. Then you can buy B

  6. Divakar says:

    Is the perpetual option for SIP provided by SBI mutual funds Secure and risk free?? Is it same as other SIP options??
    Who all other than SBI mutual funds provide this option for SIP??
    Guide me in detail for this please.
    Thank you.

    1. I am not aware of that perpetual thing . Give me more details on that

  7. Kirti says:

    Sir, I don’t have any idea of mutual investment. I hv to invest my 1 lac money for 1 yr and need to return best for my urgent work. I hv done only FD in the sbi bank; which return ar 9 to 9.5. Can U suggest me the best plan to invest for 1 yr benefit . and also suggest some best plans for regular investment. Thanks

    1. Do a FD , nothing else fits 1 yr goal period if you want risk free return

  8. Aditi says:

    I am new to mutual fund investments.

    When I see fund information on the moneycontrol.com, I see lot of fund names have an alphabet suffixed to it. for example – HDFC Balanced Fund (G).

    In above example – What is this alphabet ‘(G)’?

    Thanks,
    Aditi

    1. GVR says:

      G – GROWTH
      D-DIVIDEND

  9. Prashant says:

    Hi Manish,
    I have started investment in MF . Please see below and advise.
    HDFC Children Gift Fund( son 8 yr)- Rs 5000- since feb 15
    HDFC Children Gift Fund(son 1.5 yr)-Rs 5000- since feb 15
    SBI Small & Midcap Fund Reg- Growth-Rs 2500- since feb 15
    Birla Sun Life MNC Fund- Growth-Rs 2500- since feb 15
    Reliance Small CAP Fund Growth Plan Growth Option-Rs 2500- since feb 15
    Sundaram Fund Regular Plan Growth-Rs 2500- since feb 15

    LIC – Jeevan Anand- Since 2005- yearly 15000
    HDFC SL Sampoorn Samridhi- since 2013 yearly 25000
    Reliance Tax saver- monhly 1000- since 2010
    Kotak Tax saver growth – 1000 – since 2010

    Thanks.

    1. Good to know that !

      1. Prashant says:

        Thanks. Could you please advise?

    2. Hi Prashant

      Its not so simple to just comment. We need a full portfolio check which will take a lot of time.

      Manish

  10. vamshi says:

    Hello Manish.
    I thank you very much for helping thousands of financial illiterates(like me. 🙂 ) with your insightful articles. Hats-off to you. I am 26yrs and want to start investing in MFs through monthly SIP of 10,000 for about minimum of 5yrs. Based on your suggestions and clarification given in comments for many people, I just did research and came up with 4 MFs to invest. I would like to seek your advice regarding my selection of funds. Is it good or Do i need to add/delete/change any.?

    Two are Diversified Equity:
    UTI MNC Fund (G) – 2500pm and
    Franklin India High Growth Companies Fund (G) – 2500pm

    And other two from Balanced Funds:
    HDFC Balanced Fund (G) – 2500pm and
    Tata Balanced Fund (G) – 2500pm

    Thanks in advance.

    1. These are good enough funds if you are starting .. I would have chosen HDFC Prudence also ..

  11. ashish says:

    Dear Manishji,
    Thanks for empowering us with investment ideas. I wiould like to request you on my portfolio. I have started SIP of HDFC Top 200 (g) with Rs 13000/-Pm and HDFC Equity (Growth) of Rs. 12000/- Per month. My time horizone is for 12+ years. I am planning to increase amount of Rs. 5000/- Per month Shall I ibvest in same funds or salect another fund if yes please sugesset.
    Please comment on my Portfolio.
    Thanking you in anticipation.
    Ashish

    1. As of now , its a good choice ! .. keep going !

  12. Shujaat Hashmi says:

    Respected Sir/Madam,

    I am looking to invest Rs. 3000 per month for the next 20 years for my
    daughter education and marriage who at present is 1 year old now.

    I am planning to invest in mutual funds so can you please give me some
    mutual funds in the same respect. Also please give me their last 5 years
    annual interest.

    Awaiting a quick response.

    1. Sure .

      We need to suggest you that understanding your risk appetite . Would be interested in talking to us for your requirement and explore a better professional approach ?

  13. Very good article about Mutual funds. Easy read. Thank you !!

  14. Gurumoorthy says:

    Hi Manish,

    Just started to read your articles. Never given a thought of investment until i read your articles. To invest in Equity / MF, do i need to open demat account or directly can i approach any agent.
    Regds,

    1. You will require a demat account for STOCKS , but for mutual funds you can directly invest with Mutual funds companies or through an AGENT . Read more on mutual funds here – https://www.jagoinvestor.com/category/mutual-funds

  15. Amaresh Nabar says:

    Hello Manish, Thanks for making it so simple. Continuing to follow these articles, will make us better informed with ease. I am 35, unmarried, staying with parents, working for a healthcare BPO with monthly income of Rs. 30,000-35,000. I am also associated with LIC India as advisor. I would like to present my current investment structure started since January 2013. For life insurance, I have taken a term plan of Rs. 60,00,000 equally shared between LIC and HDFC. Health insurance consists of cover provided by my employer of Rs. 1,00,000 as well as Apollo Munich Health policy with critical illness of Rs. 3,00,0000 for premium of Rs. 5,000. My father, an ex-banker has cover for himself and my mother. My mutual fund investments for 3 years consists of SIP of Rs. 2000 in DSP Blackrock Top 100 Eq. Fund, Rs. 2500 in BSL Dynamic Bond Fund, Rs. 1000 in Reliance Gold Saving Fund, Rs. 2000 in Top 100 Eq Fund. I have also invested Rs. 50000 in MIP Fund through STP mode for 3 years. Please advise me on my insurance and investments. Regards, Amaresh.

    1. Hi Amaresh

      You have to ask if your life insurance cover will be enough for your dependents or not ? How will they use this money . the answer is within your own situation.

      1. Amaresh Nabar says:

        thank you Manish. Please guide me whether my MF investments for a period of three years are on track. My mutual fund investments for 3 years consists of SIP of Rs. 2000 in DSP Blackrock Top 100 Eq. Fund, Rs. 2500 in BSL Dynamic Bond Fund, Rs. 1000 in Reliance Gold Saving Fund, Rs. 2000 in Top 100 Eq Fund. I have also invested Rs. 50,000 in MIP Fund through STP mode. Regards, Amaresh.

  16. Karthick says:

    Thank you Manish.. But if I surrender it will I get atleast the amount whichever I have paid till nw (160000)..??Im not expecting it immediately but sometime later. Bcos they mentioned like the surrender val as 95000 alone.. And they told that min of 5 years I cant close the policy. Pls advise..wat does surrender actually means..?? If I close it wat would be the alternate policy can I choose??

    1. Why do you want to get what you paid . Does it make you feel better ?

      Manish

  17. RAJA says:

    Dear Manish,
    i’m Working in Makkah, 37 yrs old, i have 1 daughter-6 yrs, 1 son-2 yrs. I invested in MF 15000 p.m (Last june i started MF) pls.check my portfolio and give me your suggestion.
    i’m waiting for your reply.

    1. ICICI -pru focused Bluchip fund – 3000 p.m.
    2. HDFC TOP 200 G – 5000 p.m.
    3. UTI- Opportunities Fund – 2000 p.m
    4. RELIANCE oppor. Fund G – 2000 p.m
    5. IDFC Premier Eq. Fund G – 3000 p.m.

    Best Regards,
    RAJA

    1. This is good overall . Continue !

      1. RAJA says:

        DEAR MANISH,
        THANK YOU VERY MUCH FOR YOUR RESPONED.

        NOW I’M N NRI…. CAN I TAKE TERM INSURANCE…. WHICH ONE IS BETTER?

        PLS. TELL ME

        RAJA

        1. Try SBI if they allow you !

          1. Karthick says:

            Dear Sir,
            I have taken tata aia life investassure sampatti ULIP plan on 2009. I have paid 4 terms of 40000 each year so far. Totally I paid 160000 but the matured amount is only 135000. I am not sure what should I do now. Whether to continue or not. I even dont know whether they are tracking the fund or not. But every month they are taking Rs.220 as management charge. Please advise.

            1. Better get out of it . Surrender it . Never take what you do not understand how it works !

  18. K C Rana says:

    Hi Manish,

    I want to open SIP in a mid cap i.e. Quantum Long term equity fund for 10-12 years.
    In accordance to volatile market ;Please suggest which option would be better:
    1.Fortnightly SIP or
    2.Monthly SIP

    Thanks,
    K C Rana

    1. Monthly is always better

  19. Chandra Aiyangar says:

    Extremely well written. Simple to understand for novice like me.

  20. kamal says:

    manish sir,,hi
    plz help me
    my father has invested in mutual funds
    1 rs10000 in ( L121G sbi one india fund- growth) and bough 1000units in jan 2007 with nav rs 10/unit ……now nav dont know cant find in google
    2 and rs 5000 in ( L018 sbi magnum tax gain scheme -devident ) and bought 86 units in jan 2007 with nav rs 56…..now nav is 36
    what to do for these mutual fund ??
    should i continue with these for more time??
    kindly help thanks in advance

    1. From where did you buy them ?

  21. bireswar saha says:

    sir/madam
    i have invested rs 5000 per month in MF through SIP in ICICI focused bluechip equity-reg. growth since 9/2/13. pls advice me how long should i keep on investing in order to get better returns.

    thanking you
    dr.bireswar saha

    1. You should look at 7-10 yrs time frame !

  22. Chetan Ambi says:

    Informative..

  23. Nikhil says:

    Hi Manish

    I have just finished my first year in job and now I am very serious about my future goals (thanks to your 1st book 🙂 ). I would be having around 4 lacs of investible income (excluding 80C). Now I want to invest all of it in equity (as my 80C takes care of debt investments). So how should I go about it? Which (type) MF are good for starters. Whether should I go for yearly lumpsump or SIP? I am looking for a 5 year investment time frame.

    Thanks
    Nikhil

    1. Nikhil

      You can look at HDFC Prudence as your option for now .. invest 50% in Recurring deposit for some time and rest in HDFC prudence .

  24. KP says:

    Hi Manish!
    Firstly, thank you for making the basic concepts of MF clear. Begin a beginner in MF Investment, I did made an attempt to understand a little abt it. However, I still stand a bit confused that should i investment in MF if i am looking for a short term investment?? like probably 1-1.5 yr.

    1. No , mutual funds are long term investments .. if your time horizon is just 1-2 yrs .. better go with Recurring deposit !

  25. Rajendran says:

    Yes, that’s what i understood thru blogs. Anyhow, could you please guide me to choose the right SIP fund ?
    I have decided to invest 5000 per month in MF via SIP. I did analyze my Risk profile thru few online tools and came to know that the risk level is “Balanced”.
    My expected final Corpus after 7 yrs would be 10 L.

    1. You can invest in HDFC Prudence . Note that you cant decide the risk level as well as Maturity amount also

      1. Rajendran says:

        Thank you very much for your suggestion. Just analysed the fund performance at moneycontrol, As a result i found, there is one more fund named “HDFC Balanced” which performed better than HDFC Prudence. correct me if am wrong!

        1. You compared them for what duration ?

  26. Rajendran says:

    Fantastic Article, if had known this information (clearly) earlier i would have invested more in MF’s.

    You have explained it like a delicious cake.

    1. Now you can invest in mutual funds , whats stopping you !

      1. Rajendran says:

        Sure i am gonna do it. I have created a new FundsIndia account yesterday and waiting for the account activation. Now i have one doubt , i already have a demat account (don’t know how to use it :)) with AXIS bank. which would you prefer to invest only in MF’s. (As per analysis using demat account only for MF’s is not recommended).
        Please pour your suggesstions.

        1. You can use demat account , no issues, but the only thing is the charges by them. Else you can use it !

  27. Ashwin says:

    very good article abour MF. Now, just we should now english to know about MF. remaining thing their in jagoinvestor.com
    Thank u very much manish

    1. Good to know you learned about MF clearly from this website

      Manish

  28. kumar says:

    Easy read! Good Article

  29. Bhavesh says:

    Thanks bro…., thanks for your info.

    1. Bhavesh

      Nice to know that 🙂

      Manish

  30. Jay says:

    Dear Manish Sir,

    Thank you for providing good knowledge about MF. I want to invest in MF(SIP) but confusion that it is good time to Investment in MF. If yes, so which fund should be invested ?

    Thank you,

    Jay

    1. Jay

      If you want to invest through SIP , then there is no good or bad time, you just have to start , also if you have to invest for very long term , still you can invest in one go , but for shorter term, its definately not the best time .

      For best funds , better look at https://www.jagoinvestor.com/2010/08/list-of-best-equity-diversified-mutual-funds-for-2010.html .

      I would suggest ask more questions at our helpline : https://www.jagoinvestor.com/forum/

  31. Milind says:

    Manish,

    one (silly) question 🙂

    the exit load which is 1%(most of the time) is applied to investment amount OR the return that we have received ?
    for ex. if I invest 1,00,000 into debt MF. After 10 months its value is 1,10,000 and if I redeem it before 1 year(or specific time mentioned by AMC) the 1% load applies to the 1 lac OR 1,12,000 OR just profit of 12000 ?

    please guide

    1. Milind

      Its your investment value 🙂 . So if your total worth is 1.1 lacs, it will be on 1.1 lacs only 🙂 = 1100

      Manish

  32. vijay says:

    Hello,

    There are two categories of mutual funds open-end and close-end,
    and they are different so is there is different in their rate of return,
    which is best for return base…….

    thanks you

    1. Vijay

      Close ended funds are just the one which has restricted entry and exit, now a days we dont see much of close ended equity funds , the returns might differ just because of the fast that close ended funds can freely lock in their investments for long time .

      Manish

  33. Vinit says:

    Hi Manish,
    Got lot of information from this article. Thanx
    My question is if i want to invest Rs 1000/ month in 4 different equity funds for 3 years what would be the best for me.
    should i go via an agent? If yes, how much i need to pay him apart from these Rs 4000/month

    waiting for your response

  34. Mohan says:

    I never understood MF until I read this article. Thanks. By the way, can I ask my doubt in comments. That would be appriciated.

    1. Mohan

      Yes you can ask 🙂

      Manish

  35. PRABHU says:

    Hi Manish,

    I need Information which explains the Ratios/information to look at when selecting a stock to Buy.

    Please help

  36. vinod S says:

    Hello Sir,

    I am A Beginer, but not able to decide which mutual fund to start of…Can you let me know which funds would be better to create a good financial background, as iam 29 now at this would be my 1 st investment… Your site is really intersting.. very muc learning out of it….awaiting for your earliest response…

    thanks,
    Vinod.

    1. Vinod

      You can start with Balanced funds for now , Go for HDFC Prudence or DSPBR Balanced in the start .

      Manish

      1. vinod S says:

        Thanks Sir,

        1. Sir i want to learn how to find out which fund will be good choice
        What are the parameters you guage them?

        2. I had few choices correct if iam wrong?
        DSPBR Equity G
        IDFC Premier Equity G
        Reliance Regular SAving Equity

        or you can name few other funds for me

        Sir i am 1st planning to invest 1500 monthly appx. for my self and for my mother Rs. 5oo/- and later on i might add on another 500 monthly…

        Recently i had taken LIV Jeevan Saral plan for me and my wife Total Rs. 3000/- Monthly…

        Your site is really very interesting and loads n loads of learning…
        Please give me some knowledge..when it comes to choosing the fund.

        Awaiting for your response….

        Thanks you again for your answers i will defintely go through in detail.

        Cheers
        Vinod.S

        1. Vinod S says:

          Hi Sir,

          Havent received your advised, because depending on answer, i can decide how to go about, because i believe you speak facts….

          Awaiting for your earliest responses.

          Thanks
          Vinod

          1. Vinod

            Apologies for late reply .

            Dont try too hard in choosing the best funds, you can never do , nor can I . Choose the long term winners who are in top 10 and just make sure you consistently invest for long term . Even if you get 22% instead of 24% , its fine . Your goals will be met easily even then , dont loose sleeps over 1-2% , even though they matter a lot in long run 🙂

            Manish

            1. Vinod S says:

              Hi sir,

              like i said that you speak facts, Thank Q very much for such a positive reply…
              at last decided i had invested in Reliance Regular saving Equity Rs. 1000.00 for 6 months… for my mother investment need to invest Rs.500….

              Thanks sir, let me know if it is a good choice, if not later i can switch into a different fund… As i have a best advisor…Manish sir, Thanks…

            2. its a bit aggressive fund i would say , better start with a balanced one .u can try HDFC prudnce and for your mother better get UTI Mahile Unit scheme .

              Manish

            3. Vinod S says:

              Thanks Sir,

              I have already authorised a transcation for Rs 1000 for Reliance REgular savings Equity Growth option….

              I have HDFC account under that i have mutual fund tab, once i select the UTI Mutual fund to find out UTI Mahila Unit Scheme, they dont have that fund to invest, but yes i had check the performance of that fund it is a performing fund, thanks for the advise…

              Again i would say sir thank Q very much to keeping me on track.

            4. Vinod S says:

              Hi Sir,

              Havent received a reply for the previous mail….

              I have a another choice as well….could you please tell me how is ICICI pru discovery fund G

            5. Its a good fund

              Manish

  37. amolsw says:

    Manish,

    Saw these terms on moneycontrol.com(about MF). Can you throw some light on them
    — Debit floater
    — DEBT LTP
    — DEBT STP
    — LIQUID

    thanks,
    Amol

    1. Try to search on net first. even i am not sure on LTP . i think at this point , its not relevent .

      Manish

  38. ashish says:

    thanks manish ji.
    basic information is enough to move into MF.

    1. Ashish

      thanks 🙂 , glad you loved it .

      Manish

  39. ts gnanadev says:

    hi Manish!
    very usefull….thanks…
    ts

    1. ts

      thanks :0

      manish

  40. MK says:

    Hi,
    It is a very nice article. Continue doing the same. Thanks alot

  41. Mahesh says:

    Hi Manish,
    Very Nice Article for the begineers.
    Thanks.

    1. manish says:

      Thanks Mahesh .. keep coming

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