Skip to main content

You do not need Demat Account for Investing in MFs

There is a large number of such investors in India who miss out on this excellent investment avenue by falling prey to myths, primarily due to lack of knowledge and proper guidance. Given below are some myths surrounding mutual fund investing:

Myth 1: MFs invest only in shares & are risky

Mutual funds invest in shares, gold and also fixed income products like bonds, non-convertible debentures, government securities, corporate debt instruments, bank certificates of deposit (CDs) and corporate commercial papers (CPs). In fact, almost 70% of the money invested in mutual funds in India currently is in safer fixed income funds. The risk in mutual funds depends entirely on the risk you wish to take. You can invest in low-duration debt funds to have almost no risk to your investments. On the other hand, thematic and diversified equity funds let you have higher risks.

Myth 2: You need to have a demat ac to invest in MFs

Most mutual fund investing in India is done without a demat account. There are a large number of online portals that let you buy funds online without a demat account. You need to have a demat account only if you wish to trade mutual funds online.

Myth 3: NFOs are good since they offer units at lowest

NAV Performance of mutual funds is measured in annual percentage returns. Whether the NAV is Rs 10 or Rs 100, it does not matter. New fund offers (NFOs) could actually be risky since the fund management team managing the NFO may not have an established track record. NFOs should be subscribed to only if there's a very compelling theme on offer, which is not available in any other existing well-performing, open-ended funds.

Myth 4: You can pick best funds from a website & invest

This could be a way to prepare a portfolio. However, in case of equity funds, care should be taken to pick up good funds of different fund categories so that all the funds do not land up having similar underlying stocks, which defeats the very purpose of diversification. In case of debt funds, interest rate movements and your own fund requirement should dictate the type(s) of funds to pick up. Also, choose funds with a stable and a well-performing track record and managed by proven fund managers. Do not look at only short-term past returns while choosing funds.

Myth 5: When markets go up, I should redeem my equity funds

Investing should be for meeting your financial goals and not just to make more money .If the goals are still far away, there is no reason for you to redeem. If you feel markets are likely to go down, you may shift the funds fully or partially to safer debt funds, rather than disinvesting and then letting that money lie in bank products that give low returns.

Myth 6: MFs are a product like shares, FDs, insurance, etc

Unlike other instruments, mutual funds are more like a basket of products. You have safer debt funds that give you exposure to bank, company and government securities, while equity funds invest in different categories of stocks, and gold funds invest in gold. You can also get a combination of two or all three of these products. The facility to seamlessly shift between these different products is also available without selling the funds - something that is not available in FDs, insurance and shares.

Myth 7: Dividend option is better than growth option

Dividend in mutual funds is not a fixed return. The date and amount of dividend depends on the fund manager. Hence, you may get dividend when you don't need it, and not get it when you need it. Also, your fund NAV goes down by the amount of the dividend when it is declared. Systematic Withdrawal Plan (SWP) in a growth option may provide more certain returns if you need to get money at regular intervals.


Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

Invest in Tax Saver Mutual Funds Online -

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

Popular posts from this blog

Tata Mutual Fund

Being a part of the Tata group, the fund has the backing of a very trusted brand name with strong retail connect. While the current CEO has done an excellent job in leveraging the Tata brand name to AMC's advantage, it is ironic that this was just not capitalised on at the start. Incorporated in 1995, Tata Mutual Fund remained an 'also-ran' fund house for around eight years. Till March 2003, it had a little over Rs 1,000 crore in assets and 19 AMCs were ahead of it. But soon after that the equation changed. It was the fastest growing fund house in 2004 and 2005. During these two years, it aggressively launched six equity funds, two debt funds and one MIP. The fund house as of now stands at No. 8 in terms of asset size. This fund house has a lot to offer by way of choice. And, it also has a number of well performing schemes. Tata Pure Equity, Tata Equity PE and Tata Infrastructure are all good funds. It also has quite a few good debt funds. The funds of Tata AMC are known to...
Read more

UTI Mutual Fund

Even though only a few of UTI’s funds are great performers, this public sector fund house has many advantages that its rivals do not. It has a huge base of retail equity investors and a vast distribution network. As a business, it looks stronger than ever, especially in the aftermath of credit crunch. UTI is, by a large margin, the most profitable fund company in the country. This is not surprising, since managing equity funds is more profitable than debt. Its conservative approach and stable parentage is likely to make it look more attractive to investors in times to come. UTI’s big problem is the dragging performance that many of its equity funds suffer from. In recent times, the management has made a concerted effort to improve performance. However, these moves have coincided with a disastrous phase in the stock markets and that has made it impossible to judge whether the overhaul will eventually be a success. UTI’s top performers are a few index funds, some hybrid funds and its inf...
Read more

Salary planning Article

1. The salary (basic + DA) should be low. The rest should come by way of such allowances on which the employer pays FBT and you don't pay any tax thereon. 2. Interest paid on housing loan is deductible u/s 24 up to Rs 1.5 lakh (Rs 150,000) on self-occupied property and without any limit on a commercial or rented house. 3. The repayment of housing loan from specified sources is also deductible irrespective of whether the house is self-occupied or given on rent within the overall ceiling of Rs 1 lakh of Sec. 80C. 4. Where the accommodation provided to the employee is taken on lease by the employer, the perk value is the actual amount of lease rental or 20 per cent of the salary, whichever is lower. Understandably, if the house belongs to a family member who is at a low or nil tax zone the family benefits. Yes, the maximum benefit accrues when the rent is over 20 per cent of the salary. 5. A chauffeur driven motor car provided by the employer has no perk value. True, the company would...
Read more

8 Investing Strategy

The stock market ‘meltdown’ witnessed since the start of 2005 (notwithstanding the recent marginal recovery) has once again brought to the forefront an inherent weakness existent in our markets. This is the fact that FIIs, indisputably and almost entirely, dominate the Indian stock market sentiments and consequently the market movements. In this article, we make an attempt to list down a few points that would aid an investor in mitigating the risks and curtailing the losses during times of volatility as large investors (read FIIs) enter and exit stocks. Read on Manage greed/fear: This is an important point, which every investor must keep in mind owing to its great influencing ability in equity investment decisions. This point simply means that in a bull run - control the greed factor, which could entice you, the investor, to compromise with your investment principles. By this we mean that while an investor could get lured into investing in penny and small-cap stocks owing to their eye-...
Read more

Debt Funds - Check The Expiry Date

This time we give you an insight into something that most debt fund investors would be unaware of, the Average Portfolio Maturity. As we all know, debt funds invest in bonds and securities. These instruments mature over a certain period of time, which is called maturity. The maturity is the length of time till the principal amount is returned to the security-holder or bond-holder. A debt fund invests in a number of such instruments and each of these instruments would be having different maturity times. Hence, the fund calculates a weighted average maturity, which would give a fair idea of the fund's maturity period. For example, if a fund owns three bonds of 2-year (Rs 30,000), 3-year (Rs 10,000) and 5-year (Rs 20,000) maturities, its weighted average maturity would be 3.17 years. What is the big deal about average maturity then, you may ask. Well, knowing a fund's average maturity is important because it tells you how sensitive a fund is to the change in interest rates. It is ...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now