New Delhi. After 4 months of decline The trend of rise in the stock market continues. Sensex has gained 10 percent from the low level. Seeing these returns, common investors also start getting attracted towards the stock market, but their nervousness increases due to the market risk. In such a situation, investing money in mutual funds (Best Mutual Funds) can be a good option for investors. Experts say that the money of mutual funds is also invested in the market, but in this, an expert does this work for you, which reduces the market risk.
First of all, you have to decide what is the purpose of your investment.how much can you invest and for how long can you stay in it. If you have to invest for a year or two, then there will be different mutual funds for that. If you have to invest for 5, 7, 10 years or even more, then there will be other mutual funds for that.
It is clear that choosing the right mutual fund depends on what your investment period is. For example, if you are investing for a short period, then you can choose debt funds or liquid funds. On the other hand, if you are investing for a long period, then equity mutual funds will be right for you.
You are getting more returns than FD- According to the data given on Moneycontrol, investors in smallcap equity mutual funds have got more than 10 percent return in the last one month. On the other hand, if we look at the return on FD, it is only 5 percent.
What do we do now- In such Systematic Investment Plan (SIP) allows you to invest regularly in mutual fund schemes. Experts say it is the most effective way to invest in mutual funds. There are certain conditions that need to be fulfilled to start investing in SIP. These are mentioned below. SIP should be started according to the type of scheme, its performance, portfolio and your goals. KYC has to be completed before starting SIP. It should always be kept updated. Investors can start SIP both offline and online.
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Investors can also make lump sum investments with SIP instructions. – Any change in SIP instructions requires re-starting the SIP. This may require repeating the entire process. Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Aarti Bhargava and Labdhi Mehta.
You can start SIP from home How to start NACH offline: For this, the investor needs to fill a form. It can be obtained from the fund house. There is also an option to download it from the fund house’s website. An auto debit NACH mandate also needs to be filled in it.
Apart from this, a copy of the cancelled cheque needs to be attached with the KYC documents. These KYC documents include proof of address and identity. These documents can be submitted at the Investor Service Centre or the branch office of the AMC.
Online method: SIP can also be started online. The following options are available for this: SIP can be started using the i-SIP facility from the fund house website by entering your personal details, SIP and bank details on the fund house website. A URN will be generated upon filling in the details.
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After this, the investor will need to log in to his bank account. Then he can add the mutual fund as a ‘biller’. The URN will be required to enable SIP instructions.
Distributor Portal – Mutual fund distributors such as corporate distributors or banks provide portals for online transactions of mutual funds. SIP can be started easily through these portals. If the bank mandate for auto debit is already registered on the portal, then it can also be used for SIP.
Mutual Fund Transaction Portal – There are many types of transaction portals for mutual funds. These include portals provided by the registrar of the fund house or the MFU (Mutual Fund Utility) platform. SIP can also be started using these platforms.
It is important to know about NAV-Let’s assume that you invest Rs 10,000 in a mutual fund scheme. Its NAV is Rs 200. In this case, you will get 50 units. How? If you divide 10,000 by 200, you get 50. 10,000/200=50. You get these units when you invest in the scheme. These units are of utmost importance in buying and selling.
Now suppose the NAV increases from Rs 200 to Rs 250 in a year and you decide to sell it. What will happen then? Now you will get Rs 12,500. This amount will be obtained by multiplying 50 units by Rs 250. 50*250=12500. But one thing has to be kept in mind here. Suppose there is an exit load of one percent, then you will now get only Rs 12,375. Its formula is: 50 units * Rs 247.50 NAV – Exit load.
Thus, NAV is the value of the assets of the mutual fund scheme less the liabilities per unit. NAV shows the total value of all the securities held along with cash. As you have seen, it is calculated on the basis of unit minus all the liabilities.
If the prices of most of the securities of the scheme increase, then the NAV will also increase. If they decrease, then the NAV will decrease. That is, the NAV increases and decreases with the prices of the securities of the scheme. Securities mean both equity and debt instruments. It includes equity shares, bonds, debentures, commercial papers, etc.
Overall, if the scheme makes a good investment, its NAV will increase. That is, the value of the investment will increase. If the investment of the scheme decreases, its NAV will also be affected.
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Tags: Mutual fund investors, Mutual Funds
FIRST PUBLISHED : June 17, 2020, 06:14 IST