Which is an Ideal Investment, Mutual Funds or Shares?

hElLO tRaDeR,

This is a resourceful link:

if you know nothing about stock financial and could not track the stock ,then mutual fund is best investment but if you can track the financial and also news,then stocks are better choice.

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New investors who are looking to make wise investments for future prospects usually face two core alternatives – individual stocks or mutual funds. Mutual funds are actively controlled sectors of stocks that are automatically diversified and designed to beat the market with a dedicated fund manager.

On the other hand, stocks are procured by the investor from any brokerage and the responsibility is borne by the investor to maintain their own portfolio. Mutual funds are referred to as passive structure of investing, while stocks are active investing.

Both the forms of investments have their own advantages and disadvantages, and it is important for investors to understand the underlying differences.

Beginner investors usually start with mutual funds as there is not much risk associated with this. It is presented in a large variety of flavors and holds a large number of stocks with each equity contributing to a small percentage of the overall portfolio. Also, mutual funds need to be held on for a long time in order to observe a slow and steady growth.

Adventurous investors who are not satisfied with lower and long-term returns of mutual funds can invest in stocks with a personal portfolio of their choice. You get to decide on the number of shares and the desired price. Individual stock investors need more time on hand to study the patterns of the market along with current trends and stories.

A good investment portfolio should be a combination of the both. It is best to be aware of your investment time period and risk tolerance levels before making any kind of investment. So, understand your requirements, before you embark on your investment journey.

My personal experience is that mutual funds are as gullible as individual investors (if not more). If the markets go up in a frenzy, they will all start bragging about their fantastic performances. On the other hand, if the markets go down in panic, they will just keep silent about their past performance and launch new schemes with attractive names like ‘India Emerging Stars’, ‘Global Emerging Stars’, ‘India Opportunities Fund’, ‘Global Opportunities Fund’, ‘India Double Plus’, ‘India Triple Plus’, etc.

Moreover, there are thousands of schemes to choose from. So, selecting a proper scheme which suits your needs is a job in itself.

Having said so, if your capital is small or if you don’t have time to learn new things … mutual funds are the best ‘bait’ for you!

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Should You Go For Mutual Fund Investments

Until few years back,the proportion of people going for Mutual Fund investments was significantly low.However in recent times,this proportion is picking up.The reasons attributed can be increasing awareness among people,more ease of investing,better understanding about Mutual Funds among the retail investors and general public and lower investment costs etc.

So are you a Mutual Fund investor? If not,are you looking to go for Mutual Fund investments? Let’s find out if it makes sense to invest your hard earned money in Mutual Fund schemes.

What are Mutual Funds ?

By definition,we can say that Mutual Fund is the scheme of pooling large sums of cash from a number of investors at a common place and putting that cash into a portfolio, made up of various market and non-market instruments like stocks,bonds,government securities and others.This is done by professional fund managers which are hired by the asset management companies (AMC).These fund mangers charge hefty sums of fee from these AMCs which an individual investor can not afford to pay.

When the value of investment made by these fund managers increases over  time periods,these investments are sold in profits.The AMCs after keeping their share of profit,distribute the rest of the profits among its investors.So the retail investors get these profits as returns on their investment.Same is true in case the investment made by the fund managers depreciates in value due to fall in their portfolio securities.So the losses are also born by the individual investors.Resultantly,the investors get less cash than they invested with the AMC.

Just like the stock prices are represented in the form of their Last Traded Price or Current Market Price (CMP),the Mutual Fund Scheme is represented in the form of Net Asset Value or NAV.The NAV keep rising or falling according to the performance of the Mutual Fund portfolio managed by the fund manager.The day you invest in Mutual Fund,you are allotted the number of Units according to the NAV of that scheme on that day.If you invest ₹ 5000 @ NAV 50,you shall be getting 100 Units.When you want to exit the scheme,the amount according to the NAV of your exiting day shall be credited to your bank account.If NAV rises to 60,you shall get 100 X 60 = ₹ 6000 and if NAV falls to 40,your investment shall be 100 X 40 = ₹ 4000.

There are so many types of AMCs which offer Mutual Fund schemes to investors, like Reliance,HDFC,ICICI,UTI etc. to name a few.The AMCs charge small fee from the investors for Mutual Fund investments.Some Mutual Fund schemes are exempt from any fee,for example Liquid Mutual Funds.[ Earlier there was fee in the form of Entry Load when you buy the Mutual Fund and Exit Load when you exit out of that Mutual Fund but now regulator has asked the AMCs not to charge the loads after August 2009.]

Mutual Funds,Indian currency, 1000 (twenty) Rupees

Advantages of Mutual Fund Investments :-

Mutual Funds provide plenty of advantages to investors for investment purposes.They add versatility to the savings and investment portfolio of an ordinary person who is not familiar with working of stock markets and provide a chance of equity exposure which can be a good bet for long term.Following are the main advantages –

Capital Appreciation – Mutual Funds have the capability to deliver higher returns compared to traditional savings schemes,especially the Mutual Fund schemes based on equities.If you want to park your money for long time (more than 5-10 years),it is better to opt for Mutual Funds than fixed deposits (FDs) or recurring deposits (RDs).Over long periods,these funds may offer returns greater than 15% while FDs or RDs yield only 8-9%.In reality,some funds have even deliver above 20% returns to investors.

Professional Management – By opting for Mutual Funds,you get your investments managed by qualified professional fund managers.You need not keep tracking the stocks or the stock markets.Fund managers keep doing this for you,shuffling and switching the portfolios.You are required to review the performance of the fund only,that too only once or twice a year to know that your fund is performing well and on par with the stock markets and the other funds.

Income Tax Benefits – After a period of one year,Mutual Funds investments provide income tax benefits as the returns on investments come under the preview of long term capital gains which are exempted from income tax liabilities.So there is hardly any tax on income from Mutual Funds as compared to fixed deposits where income is taxable.

Portfolio Diversification – As the pooled money is invested over various instruments,your investments get the benefit of Diversification.Diversified Equity Funds expose your cash to stock markets which are the best asset class for the investments.Consequently,you earn better returns.

Transparency – Mutual Fund investments are highly transparent and well regulated by the securities watchdog.The amount you invest in Mutual Fund,you get Units allotted for that.The Account Statement stating the balance Units is delivered to you.When you need to exit the Mutual Fund,the amount corresponding to Net Asset Value (NAV) of the Units is credited to your bank account in 3-4 business days.

Need Specific – You can go for any Mutual Fund scheme according to your requirement.In case you want the dual benefit of income tax saving along with growth of your capital,Tax Saver Funds or Equity Linked Savings Scheme (ELSS) are there for you.For short term savings where you need liquidity along with more return on your savings,you can opt for Liquid Funds. Similarly there are Fixed Income,Debt,Balanced fund schemes and so on.

Systematic Investment – You can go for savings for your retirement,your children education or marriages etc. systematically via Mutual Fund route.Some schemes allow even as low as ₹ 100 per installment savings in case you are unable to invest bigger installment. These are popular as Systematic Investment Plans (SIP). There is also no upper ceiling on the amount invested in Mutual Funds.

Easy To Invest – Investing in Mutual Fund is an easy task.Just choose a right Mutual Fund scheme carefully and you can invest online directly by visiting the website of that AMC from the comfort of your bedroom.Alternatively you can visit a local office of AMC, any broker in your locality or any Bank branch can do for you as now-a-days most of the banks provide this facility.The drawback of going via broker or bank is the additional brokerage cost they will charge.

Risks Associated with Mutual Fund Investment –

Although there are plenty of advantages of investing in Mutual Funds,this is not devoid of risks associated with the investment.While going for Mutual Funds,you shall always come across a warning ;

“ Mutual Fund Investments are subject to market risks.Please read offer document carefully before investing “

So it is very important that you completely understand what you are going to do.Mutual Fund Net Asset Value or NAVs also keep fluctuating along with stock markets although the volatility is not as much as seen in stock prices.If stock markets start falling,the Mutual Fund scheme having more exposure to equities will also see decline in investment value due fall in NAVs.They move rather sluggishly and are thus good for a common investor as the losses are not that bigger and you always have the time to exit before your capital erodes substantially.

But it doesn’t mean that you should stay away from Mutual Funds.You should be aware that Rewards don’t come without Risks.The bigger the Risk, the bigger is the probability of Reward.And you can manage these risks well by choosing the right type of Mutual Fund as there are several types of Mutual Funds.

Refer to this link for Multi-baggers : https://www.dynamiclevels.com/en/multibagger-stocks-support-and-resistance

If you are speaking about Mutual funds, the best plan is sip investment plan. It’s easy to access and hassle-free. There is no paperwork included. You need your Pan card, Aadhar card and bank account number. Know your KYC well. You can get complete information on Kotak mutual funds site.

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what are the rights powers duties of the Association of Mutual Funds in India (AMFI) ?
is it governed and regulated by SEBI ?

The mutual funds have TER .
Does it include performance fees , cost , charges, rent , electricity, salary of the staff , etc all expenses ?

is there any mutual funds ; which also provide Mediclaim feature facility ?