Stocks or mutual funds where to invest ?

Dear Friends, it is always a good debate on Stocks Vs Mutual funds. I am a long term investor in both stocks and mutual funds. There are advantages and disadvantages in both cases, although both are linked to market risks and fluctuations. The decision is mostly influenced by factors like investors knowledge, risk taking power and maturity goals. So lets see what are the factors - 

Mutual Funds Vs Stocks  - 

1. 💰 -Risk to rewards  : In mutual funds investment, one takes a calculated risk and gets rewarded moderately based on fund performance. The advantage is- limited risk of losses in mutual funds when markets turn volatile and bearish. In case of stock investments, fluctuations will be more in both directions- gains and losses. so it is a high risk high returns investments. If one is having good knowledge and sufficient financial back up, he can take advantage of fast growing stocks like mid-caps to grow his capital at faster pace. 
2. $$ -Expenses : When you invest in mutual funds, your investment expenses in terms of brokerage and various fees is less compared to stock investment. The reason is, in stocks you have to trade multiple times to diversify and optimize portfolio, profits and loss. But in mutual funds, this aspect is taken care by the fund manager, so one do not need to watch and trade frequently that saves money for investors.
3. ℀ - Demat account:  For investing in stocks, one has to open a demat and trading account. Demat account is where your securities are deposited in electronic format just like your savings account. For investing in mutual funds you do not need to have demat account. You can invest directly with asset management companies. You can chose any asset management companies available to invest on web.
4. ⏰ - Time management: If one invests in stocks, one needs to invest in time and resources to screen good stocks. It is important to monitor the fluctuations, financial performances as well as observe and follow the news related to stocks, business and global scenarios. Also one needs to diversify the portfolio to avoid the risk. It requires lot of reading and understanding, which comes over a time, so one need to invest in time more, if trading in stocks. In mutual fund, things are taken care by funds manager to do research on these things and make appropriate changes in holdings, which is his domain. But it does not mean mutual funds will always perform well, you need to study mutual fund portfolio and performances as well. However, it takes less time compared to stock studies.

 I hope this article was helpful for you.. If you have any questions and comments please feel free to ask....
Happy investing and Enjoy !

Things to check before you open your- best Demat account

Hi Friends-
Back with one more important topic- Things to check before you open a demat account. 

1. Search for the reviews & feedback's: Very important to spend some time to understand what the demat service provider offers. There are plenty of reviews available on the web, go through some trusted reviews to understand and compare the services offered. Based on your investment requirements, you can screen some of the demat services, call them and verify the actual services offered.

2. Ask upfront about charges and get written confirmation: One common mistake investors do is  not asking further details about all the charges. That's where demat service providers take advantage. They will discuss about brokerages charges, but there will also be some hidden charges, you need to understand before taking final call. You will sign a bunch of documents, and thus agree to all the things without even reading ! For example some banks or companies charge DP charges on every sold securities on top of brokerage, for this they will charge minimum amount or a certain percentage whenever investor sells securities. These charges many people will not know. Once they start trading, slowly they realize, they are losing much of money in charges and brokerage and finally nothing is left as profit. I personally experienced this. So advice is to get written clarity on all the charges.

3. Negotiate on charges and services: There are many banks and companies, which will keep you charging at higher rates, you committed long back. Unless you bargain, they will keep on charging at these rate. There are many new demat & trading service options available now, and if you see an alternate demat & trading account with good services and fees, you can plan to shift. Before making final call ask for discounted brokerage, and annual maintenance fees in written. There is a SEBI circular available on web where guidelines pertaining to charges from service provider is mentioned clearly, so investors can make use of this circular and negotiate.

4. Customer care support and consumer complaints: Important to know the customer care service is better, as you would be frequently interacting with the bank for clarifications and other queries. Opt for the bank/ companies which are handling the customers with priorities and respect. There are banks an demat services which do not follow proper customer care service and it will be very disappointing and waste of time for you. Also do check for existing complaints on various consumer complaints boards, and you will come to know many things where customers are facing issues. The less consumer complaints your see on web for a bank, the better !

Hope I provided you some good information ! Feel free to put your comments and questions, Happy Investing and Enjoy !



 

Why to invest in mutual funds- Explained

New investors frequently tend to ask – Why should one invest in mutual funds? What are the benefits it offers and is it safe or risky to invest in mutual funds? Here are the explanations one would expect to have to clarify.

Benefits of investing in mutual funds-

🔓 1. No minimum locking period: The most important benefit I tell to the investors is- there is no minimum or maximum duration of investments. Many government investment tools like EPF, PPF, NSC or postal investments where investor has certain number of locking periods. But mutual fund investment can be redeemed any day when you need. But one need to understand, in order to have tax benefits on the gains from mutual funds, you have to keep invested for the period of one year. That is it; no more locking period is required.


💰 2. Start investing as low as Rs. 1000: Most SIP mutual funds have option of investing at very low monthly contribution of Rs.1000, so you do not have to bear the sudden burden of investing, and your investing will be systematic and disciplined. Why I use this term is, we generally tend to be casual and do not seriously think of importance of investing for long term goals. By the time we realize, much of the time is already wasted due to lack of awareness.


🤑 3. More reward for optimum risk: We all know, without risk it is difficult to have good rewards. So one must understand the risk taking capability of oneself. Since mutual funds are linked to market fluctuations, there will be risk associated. However, if one invests long term and systematically in good funds, surely, the risk to reward would be in favor of investor, and investors can build good capital. But again, learn and learn before you invest. Mutual funds offer better reward to risk ratio compared to stocks investments due to diversified portfolio, which is difficult to maintain for a small investors.


🔄 4. Several Options and variations: One thing I really like about mutual funds is the vast choices investors have, to choose based on one’s suitability and knowledge. There are hundreds of funds schemes available with very good fund houses. One has to spend some time to understand one’s needs and preferences and you have many options available.


I hope you liked the blog, please feel free to ask any questions you may have and I would be happy to answer them. By then, happy investing and Enjoy!


To know more on how to invest in mutual funds and where to search for resources regarding mutual funds, keep reading my blog!

What returns mutual funds will give with Rs.1000 SIP?

SIP is a short form of - Systematic Investment Plan, where in an investor makes a periodic investment in mutual fund for appreciation of wealth. One of the new investor asked me this simple question –What returns can I expect investing in mutual funds with as low as Rs.1000. Here I tried to answer it in simple manner for every new investor’s benefit.

Mutual funds returns are dependent on three main factors- 

 

1. Appreciation of the fund you invested in
2. Amount and frequency of SIP you invest in that fund
3. How long you stay invested

Let me give an example-

Mr. X has Rs. 1000 as SIP at monthly frequency. He decides to invest in a fund, which historically shows average returns of say 25% for this case, which is possible and well proven historically for many funds. Considering the scenario remains the same and Mr. X is capable of taking the market risk, at the end of 10 years:

•   Amount Invested by Mr X: Rs.1.2 Lacs
•   Future value of SIP of Mr X: Rs. 5.22 Lacks
•   Total gains : Rs. 4 Lacs

That means income of Mr. X has multiplied more than four times in just 10 years, which is very good returns scenario. Similarly, if Mr X considered investing Rs. 10000 in the same situation, would have yielded 52.2 Lacks in just ten years. Isn’t it lucrative? Of course, mutual funds and stocks are risk and rewards based investments, but given the facts, it is advisable that you should invest in mutual funds if you are capable to manage risk associated with market fluctuations.

 

Hope this article was helpful to all the new investors! Happy investing and Enjoy!

Mutual Funds Screener for Better investments

Selecting right mutual funds is the key for your successful and growing portfolio. Investors always search for good web resources to screen & evaluate mutual funds. This is an important exercise prior to investing in any mutual funds. There are plenty of fund houses and thousands of mutual funds available for investing. A smart investor has to screen the best suitable funds for his investments. In this article, I am suggesting two important web resources where you can thoroughly study & compare the performance of different mutual funds.
So lets have a look at what are those resources-

1. Value Research- click here for visiting the website
This resource is literally your complete guide for mutual funds, as they say it in their tag line. One need to create a login id and password to use all the features of this resource. Spend some good amount of time and explore the enormous data available on this website. You have option of screening your mutual funds in many different ways- such as best performing mutual funds, AMC's or fund houses, annual returns, type of mutual funds, and so on.

2. Money Control- Click here for visiting the website
Money control is well known resource and gives you a list of mutual funds with Crisil ratings. Here you can screen down mutual funds based on several options like historical performance at various years, net worth of the fund and also you can compare the performance of different funds. There is an option of selecting category funds like banking, infrastructure, healthcare, technology etc. Option for selecting and screening large cap funds, midcap funds, multicap funds and so on.

I hope you will explore these two resources and use them, for screening the right funds for your portfolio. Let me know if you have any specific questions on the same. Soon I will share with some resources for  screening mutual funds. Meanwhile, happy investing and Enjoy!