Why Invest in Mutual Fund AMFI

8/18/2019 Why Invest in Mutual Fund AMFI

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Why Mutual Fund?

AMFI IAP (Association of Mutual Funds India Investor Awareness Program)


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Your Investment Menu Card

Instrument a!

"enefit

#eturn $uration

EPF √ 8.50% Long Term

PPF √ 8% Long Term

NSC √ 8% Long Term

FD’s – Banks &Post Off!e √

5."0 to 8.50% S#ort Term

Senor Ct$enSangs S!#eme

√ % Long Term

Mutual Funds √ Mar%et &in%ed &ong erm 'hort erm

'L(P √ )arket Lnke* Long Term

NPS √ )arket Lnke* Long Term

Dre!t E+,t- √ )arket Lnke* Long Term

o/* √ )arket Lnke* S#ort Term

ea/ Estate √ )arket Lnke* Long Term


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Cost of money lying idle

Your investment ought to *eat the inflation +++

)one- n sangs a!!o,nt 1 200000

(nterest earne* n 2 -ear 34.5 6erann,m7

1 500

20500

Ta on (nterest 340.%7 9 2082

(m6a!t of (nf/aton 345% 6er ann,m7 9 5000

:a/,e at t#e en* of -ear 2 ";28

http://www.inkcinct.com.au/Web/CARTOONS/2008/2008-004--inflation-and-the-economy.jpg


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Challenges involved investing directly in

Ca,ital Mar%et

ime

-!,ertise

&ac% of Information

Portfolio .olatility

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/ey Investment Considerations

Safet-

ant t

Plus Conenen!e

?o> eas- s t to nest@ *snest

an* a*A,st to -o,r nee*sPost9ta et,rns

?o> m,!# s rea//- /eft for -o, 6ost ta


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What is Mutual Fund and Why Mutual Fund

m,t,a/ f,n* s t#e tr,st t#at 6oo/s t#e sangs of a n,m=er ofnetors >#o s#are a !ommon fnan!a/ goa/.

n-=o*- >t# an nest=/e s,r6/,s of as /tt/e as a fe> #,n*re*

r,6ees !an nest n ),t,a/ F,n*s.

T#e mone- t#,s !o//e!te* s t#en neste* =- t#e f,n* manager n*fferent t-6es of se!,rtes. T#ese !o,/* range from s#ares to

*e=ent,re to mone- market nstr,ments@ *e6en*ng ,6on t#e

s!#eme’s state* o=Ae!te.

(t ges t#e market ret,rns an* not ass,re* ret,rns.

(n t#e /ong term market ret,rns #ae t#e 6otenta/ to 6erform

=etter t#an ot#er ass,re* ret,rn 6ro*,!ts.

),t,a/ F,n* s t#e most !ost eff!ent *str=,tors of fnan!a/

6ro*,!ts

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0ow Mutual Fund wor%s? e#!/e for nestng n 6ortfo/o of sto!ks an* =on*s


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tructure of Mutual Fund

C,sto*an kee6s safe !,sto*- of t#e nestments 3re/ate* *o!,ments of se!,rtes neste*7.

http://www.thestayathomemother.com/sites/default/files/u3/goodnews.jpg


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y,es of Mutual Funds

T-6es of

),t,a/ F,n*s

B-

Constt,ton

B-

(nestment

O=Ae!te

C/ose En*e* O6en En*e* (ntera/ E+,t- F,n*s Cas# F,n*De=t F,n*s


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Com,arison 1 Mutual Funds vis232vis other

asset classes


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Advantages of Mutual Funds

2.Professona/ )anagement

.Dersf!aton

.Conenent *mnstraton

;.et,rn 6otenta/

5.Lo> !ost

.L+,*t-

45rans,arency

8.F/e=/t-

.C#o!e of s!#emes

675Well regulated

665a! *enefits

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0ow do I ma%e money from a mutual fund?

65 Ca,ital a,,reciation1

s t#e a/,e of se!,rtes n t#e f,n* n!reases@ t#e f,n*s ,nt 6r!e >// a/so

n!rease. #!#

-o, =o,g#t

85 Cou,on 9 $ividend Income1F,n* >// earn nterest n!ome from t#e =on*s t #o/*s or >// #ae **en* n!ome

from t#e s#ares

:5 Income $istri*ution1

T#e f,n* 6asses on t#e 6rofts t #as earne* n t#e form of **en*s

Ds!/amer

s t#e a/,e of se!,rtes n t#e f,n* n!reases@ t#e f,n*s ,nt 6r!e >// a/so n!rease. #!# -o, =o,g#t. /t#o,g# ),t,a/

F,n* *oes not g,arantee t#e same.


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Mutual Fund2 0ow to invest in Mutual FundsSe/e!ton Pro!ess9 ste6 6ro!ess

te, 6 Identify yourinvestment needs

2. G#at are m- nestmento=Ae!tes an* nee*s

. ?o> m,!# rsk am ( >//ngto take

. G#at are m- !as# f/o>

re+,rements

te, 8 Choose the rightmutual fund5

2. T#e tra!k re!or* of6erforman!e oer t#e /ast fe>-ears n re/aton to t#ea66ro6rate Ben!#mark an*sm/ar f,n*s n t#e same!ategor-

. ?o> >e// t#e m,t,a/ f,n* sorgan$e* to 6ro*e eff!ent@6rom6t an* 6ersona/$e*ser!e.

. Degree of trans6aren!- asref/e!te* n fre+,en!- an *

+,a/t- of t#er !omm,n!atons.

te, : elect the idealmi! of schemes

(nestng n A,st 2s!#eme ma- not meet a//-o,r nestment nee*s.


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Mutual Fund2 Which one to *uy?

Your Investment

goal

Ca6ta/

Preseratonenerate (n!ome Ca6ta/

66re!aton

Ds!/amer

s t#e a/,e of se!,rtes n t#e f,n* n!reases@ t#e f,n*s ,nt 6r!e >// a/so n!rease. #!# -o, =o,g#t. /t#o,g# ),t,a/ F,n* *oes not g,arantee t#e same.

Base* on -o,r goa/s an*

rsk to/eran!e

Mutual Funds


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Mutual Fund Products ; #is% 9 #eturn


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uggested Portfolio *ased on #is% tolerance

Aggressive Plan Moderate Plan

Conservative Plan

ro>t# S!#emes (n!ome S!#emes Ba/an!e* S!#emes)one- )arket S!#emes

his ,lan may suit1H(nestors n t#er 6rme earnng -ears an*

>//ng to take more rskH(nestors seekng gro>t# oer a /ong term

his ,lan may suit1H(nestors seekng n!ome an*

mo*erate gro>t#H(nestors /ookng for gro>t# an*

sta=/t- >t# mo*erate rsk

his ,lan may suit1Hetre* an* ot#er nestors >#o nee* to

6resere !a6ta/ an* earn reg,/ar n!ome

http://www.thecarpentersplan.com/images/uploads/news/full/young_couple_w_kids.jpg


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elect a mutual fund

2. Ea/,ate 6ast 6erforman!e

. Look for !onssten!-

Sam6/e ),t,a/ F,n* Com6arson C#art. Categor-I Dersfe* E+,t- F,n*s

Fund C is more consistent in the above chart

F,n*

Name

2


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#ating Agencies

C(S(LKCP ankngs an* :a/,e esear!# Star atng are 6romnent ones

#ole of #ating Agencies

2. Fa!/tate nforme* nestment *e!son makng

. Pro*e n*e6en*ent an* re/a=/e o6non of s!#emes

. T#e +,a/t- of t#e F,n*’s management an* o6eratons

;. ?e/6 meet s6e!f! nestment o=Ae!te


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a!ation "enefit investing in Mutual Funds

Ca,ital


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-=uity &in%ed aving chemes (-&)

advantage1 a// a=o,t 80C nestments

-& Advantage over other ta! saving instruments

2.Lo> Lo!k n 6ero*

.Earn market /nke* ret,rn

.Ta free ret,rns

Instrument #eturns &oc% In

Period (in Years)

EPF 8.50% 'nt/ etrement

PPF 8% 25

NSC 8%

FD’s – Banks & Post off!e 5."0 to 8.50% 5

Senor Ct$en Sangs S!#eme % 5

Lfe (ns,ran!e Po/!es 5 to %

-& Mar%et &in%ed :

'L(P )arket Lnke* 5

NPS )arket Lnke* t// age 0


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Investment in Mutual Fund through IP

IP ; ystematic Investment Planning

Mt s a met#o* of nestng a fe* s,m@ at a reg,/ar ntera/@ n a m,t,a/ f,n*.

(t s er- sm/ar to mont#/- sang s!#emes /ke a re!,rrng mont#/- *e6ost J 6ost off!e *e6ost

Advantages of ystematic Investment Planning

En!o,rages eg,/ar (nestments 3A,st /ke re!,rrng *e6ost

s!#emes7 Conenent >a- to nest reg,/ar/-

Lo>er nta/ nestment >t#o,t !,ttng nto reg,/ar e6ense

Long term 6ers6e!te

#u,ee Cost Averaging "enefit to !o,nter o/at/t- 9 t =rngs *o>n

t#e aerage !ost of -o,r (nestments

No tmng t#e market

)eet nestment o=Ae!te >t# nestment nee*s

?e/6s to mat!# t#e rsk J ret,rn 6rof/e


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IP1 he Power @f Com,ounding

SIP of Rs. 1000 invested per month @ 8% pa till the age of 60.

Starting Age Total AmountSaved

Value at the ageof 60

25 4,20,000 23,09,175

30 3,60,000 15,00,295

35 3,00,000 9,57,367

40 2,40,000 5,92,947

…the sooner you start, makes a diference!


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IP 2 0ow #u,ee Cost Averaging hel,s

his e!am,le uses assumed figures and is for illustrative ,ur,oses only5

P,t as*e an amo,nt reg,/ar/- ,6ee !ost aeragng

Ds!6/ne s t#e ke- Contro/ o/at/t-

)ont# mo,nt sng )arket Fa//ng )arket :o/at/e )arket

N: 3s7 'nts //otte* N: 3s7'nts

//otte* N: 3s7 'nts //otte*

2 20000 20 2000.00 20 2000.00 20 2000.00

20000 20.5 5.8 ."5 205.; 20.5 5.8

20000 2 8. 2222.22 2222.22; 20000 2; "2;. " 2;8.5" 22 0.0

5 20000 2" 588.; .5 258.; 2 ".

20000 28 555.5 2." 22.5 8.5"

otal 7777 B657 DD:54E DB58 44475D 577 665:B

g. P,r!#ase N: 3Tota/ ofN:sJNo. of nestments 2.58 8.0; 20.8

Avg5 cost ,er unit (otalInvestment 9o of units held) 685E8 4548 675E


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Mutual Fund1 0ow to *uy?

Identify ‘What to Buy’

Banks,

Financial Svc.Cos.,

Brokers,

IndividualAgents


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Mutual Fund1 0ow to redeem?


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$emystifying A. ; et Asset .alue

While selecting a fundG the A. shouldnHt *e the criteriaG A low A. need not mean that

itHs a good *uy 555

(n t#e a=oe eam6/e *,rng t#e 6ero* ,n*er !ons*eraton t#e =est gro>t#s #ae =een re!or*e* =- t#e

f,n*s >t# t#e /o>est 3S!#eme B s ".;;7 an* t#e #g#est 3S!#eme 9 s .557 N:s res6e!te/-.

On t#e ot#er #an* t#e /east gro>t# #as =een re!or*e* =- 3S!#eme E7@ a f,n* >t# a /o> N:.

C/ear/- t#e *ata s,ggests t#at t#ere s no !orre/aton =et>een t#e N: s$e an* t#e ret,rns.


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y,es of ris%s associated with Mutual Fund

Investment

Risk is an inherent aspect of every form of investment. For Mta! Fn" investments, risks

#o!" inc!"e varia$i!ity, or perio"%$y%perio" f!ctations in tota! retrn.

Market risk &t times the prices or yie!"s of a!! the secrities in a partic!ar market rise or fa!!

"e to $roa" otsi"e inf!ences. 'his chan(e in price is "e to )market risk).

Inflation risk *ometimes referre" to as )!oss of prchasin( po#er). +henever the rate of

inf!ation ecee"s the earnin(s on yor investment, yo rn the risk that yo)!! acta!!y $e a$!e to

$y !ess, not more.

!redit risk -n short, ho# sta$!e is the company or entity to #hich yo !en" yor money #hen

yo invest /o# certain are yo that it #i!! $e a$!e to pay the interest yo are promise", or

repay yor principa! #hen the investment matres

Interest rate risk -nterest rate movements in the -n"ian "e$t markets can $e vo!ati!e !ea"in( tothe possi$i!ity of !ar(e price movements p or "o#n in "e$t an" money market secrities an"

there$y to possi$!y !ar(e movements in the &.

"ther risks asso#iated are

Investment risks $i%uidity risk !hanges in the government &oli#y


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0A/ Y@


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Im,ortant Information

The market information, herever stated has !een so"r#ed from the entitiesreferred in the do#"ment. This information is p"rel$ for informational p"rposes andsho"ld not !e #onstr"ed as ree#ting or indi#ating the vies of &'ame of the ()*+.

The val"e of investments and in#ome from them ma$ go don as ell as "p andan investor ma$ not get !a#k the amo"nt invested. Please #ons"lt $o"r ta advisor!efore investing.Risk -a#tors /)"t"al f"nds, like se#"rities investments, ares"!e#t to market risks and there is no g"arantee against loss in the s#hemes or

that the s#hemes o!e#tives ill !e a#hieved. /(s ith an$ investment inse#"rities, the '( of the "nits iss"ed "nder the s#hemes #an go "p or dondepending on vario"s fa#tors and for#es a2e#ting #apital markets. /Pastperforman#e of the Sponsor 3the ()*3the )"t"al -"nd does not indi#ate the f"t"reperforman#e of the s#hemes. / Please read the s#heme information do#"ments ofthe s#heme and the statement of additional information !efore investing.

Stat"tor$ 4indl$ in#orporate the stat"tor$ details related to the #onstit"tion of the()* and the names of the Tr"stee and ()*.

Why Invest in Mutual Fund AMFI

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