why_invest_in_mutual_fund_amfi

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  • 8/7/2019 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 Tax

    Benefit

    Return Duration

    EPF 8.50% Long Term

    PPF 8% Long Term

    NSC 8% Long Term

    FDs Banks &Post Office 5.70 to 8.50% Short Term

    Senoir CitizenSavings Scheme

    9% Long Term

    Mutual Funds Market Linked Long Term &Short Term

    ULIP Market Linked Long Term

    NPS Market Linked Long Term

    Direct Equity Market Linked Long Term

    Gold Market Linked Short Term

    Real Estate Market Linked Long Term

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    Cost of money lying idle

    Your investment ought to beat the inflation !!!

    Money in savings account + 100000

    Interest earned in 1 year (@3.5 perannum)

    + 3500

    103500

    Tax on Interest (@30.9%) - 1081

    Impact of Inflation (@5% per annum) - 5000

    Value at the end of year 1 97418

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    Challenges involved investing directly in

    Capital Market

    Time

    Expertise

    Lack of Information

    Portfolio Volatility

    http://images.google.co.in/imgres?imgurl=http://www.thedigeratilife.com/images/india-stock-market.jpg&imgrefurl=http://www.thedigeratilife.com/blog/index.php/2008/06/24/investment-risk-stock-market-volatility-reality-check/&usg=__YtpbUYvYqP49pxc0imn7Vbu3_5U=&h=317&w=500&sz=23&hl=en&start=63&itbs=1&tbnid=vmt7S_FGkTukXM:&tbnh=82&tbnw=130&prev=/images%3Fq%3Dstock%2Bmarket%26start%3D54%26hl%3Den%26sa%3DN%26gbv%3D2%26ndsp%3D18%26tbs%3Disch:1http://www.freefoto.com/images/04/03/04_03_1---Stock-Market-Prices_web.jpghttp://images.google.co.in/imgres?imgurl=http://www.dreamstime.com/stock-market-financial-dice-roll-buy-sell-hold-thumb6150113.jpg&imgrefurl=http://www.dreamstime.com/stock-photos-stock-market-financial-dice-roll-buy-sell-hold-image6150113&usg=__huQ0AHH93O9Hd4OvJAarEVP_flA=&h=300&w=300&sz=33&hl=en&start=71&itbs=1&tbnid=u9-RhQXrFyY5lM:&tbnh=116&tbnw=116&prev=/images%3Fq%3Dstock%2Bmarket%26start%3D54%26hl%3Den%26sa%3DN%26gbv%3D2%26ndsp%3D18%26tbs%3Disch:1http://www.topnews.in/files/BSE-Sensex_19.jpg
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    Key Investment Considerations

    Safety

    You get your

    money back

    Liquidity

    You get your money back when you want it

    Plus Convenience

    How easy is it to invest, disinvest

    and adjust to your needs?Post-tax Returns

    How much is really left for you post tax?

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    What is Mutual Fund and Why Mutual Fund

    A mutual fund is the trust that pools the savings of a number ofinvetors who share a common financial goal.

    Anybody with an investible surplus of as little as a few hundred

    rupees can invest in Mutual Funds.

    The money thus collected is then invested by the fund manager indifferent types of securities. These could range from shares to

    debenture to money market instruments, depending upon the

    schemes stated objective.

    It gives the market returns and not assured returns.

    In the long term market returns have the potential to perform

    better than other assured return products.

    Mutual Fund is the most cost efficient distributors of financial

    products

    http://images.google.co.in/imgres?imgurl=http://www.bennetthutt.com/images/pic_partners.jpg&imgrefurl=http://www.bennetthutt.com/partners.html&usg=__NpxKiFAz79ReWUb2a0Yukz0YleY=&h=332&w=320&sz=19&hl=en&start=1&um=1&itbs=1&tbnid=vZlMKLThQPsEqM:&tbnh=119&tbnw=115&prev=/images%3Fq%3Dprofessional%2Bassistance%26um%3D1%26hl%3Den%26tbs%3Disch:1http://images.google.co.in/imgres?imgurl=http://www.hccu.on.ca/hccuimages/Investments.jpg&imgrefurl=http://www.hccu.on.ca/personal-financial-services/investments&usg=__dEt7Ihi_jx9xWb1oVCt1wnLcNfE=&h=1024&w=1365&sz=193&hl=en&start=36&um=1&itbs=1&tbnid=TYWaxswENQMvRM:&tbnh=113&tbnw=150&prev=/images%3Fq%3Dbetter%2Breturn%26start%3D18%26um%3D1%26hl%3Den%26sa%3DN%26ndsp%3D18%26tbs%3Disch:1http://images.google.co.in/imgres?imgurl=http://www.homeeddirectory.com/files/other_images/support_grp.jpg&imgrefurl=http://www.homeeddirectory.com/support_group&usg=__3aMmOJ_pYS3X_3lfgpvurEgtzPc=&h=346&w=347&sz=85&hl=en&start=18&um=1&itbs=1&tbnid=KY8rX4E6maYbTM:&tbnh=120&tbnw=120&prev=/images%3Fq%3Dsupport%26um%3D1%26hl%3Den%26tbs%3Disch:1http://images.google.co.in/imgres?imgurl=http://sjdyer.files.wordpress.com/2009/06/safety-net.jpg&imgrefurl=http://sjdyer.wordpress.com/2009/06/12/the-unending-quest-for-happiness-security/&usg=__HCk8oLu50R7U_NmGEMxsFOWJfe0=&h=322&w=472&sz=28&hl=en&start=8&um=1&itbs=1&tbnid=s7jjPXzLw5fu2M:&tbnh=88&tbnw=129&prev=/images%3Fq%3Dsafety%26um%3D1%26hl%3Den%26tbs%3Disch:1http://www.noupe.com/wp-content/uploads/2009/11/why.jpg
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    How Mutual Fund works?A vehicle for investing in portfolio of stocks and bonds

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    Structure of Mutual Fund

    Custodian keeps safe custody of the investments (related documents of securities invested).

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    Types of Mutual Funds

    Types of

    Mutual Funds

    By

    Constitution

    By

    Investment

    Objective

    Close Ended Open Ended Interval EquityFunds Cash FundDebt Funds

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    Comparison : Mutual Funds vis--vis other

    asset classes

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    Advantages of Mutual Funds

    1.Professional Management

    2.Diversification

    3.Convenient Administration

    4.Return potential

    5.Low cost

    6.Liquidity

    7.Transparency

    8.Flexibility

    9.Choice of schemes

    10.Well regulated

    11.Tax benefits

    http://www.free-living-trust-information.com/images/save-tax1.jpghttp://static-p3.fotolia.com/jpg/00/05/09/00/400_F_5090081_0PylQ2mQd4sOIj5NcwmJcp7hLearFMK6.jpghttp://www.staplescontract.com/easybuttonicon/images/easybutton.jpghttp://loans-online-resource.com/wp-content/uploads/2009/05/making-home-affordable-plan.jpghttp://car-insurance.onlineautoinsurance.com/images/low_cost.jpghttp://www.zdiaz.com/wp-content/uploads/2009/03/portfolio-diversification-1.jpghttp://kingdelrosario.files.wordpress.com/2009/06/doctors.jpg
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    How do I make money from a mutual fund?

    1. Capital appreciation:

    As the value of securities in the fund increases, the fund's unit price will also

    increase. You can make a profit by selling the units at a price higher than at which

    you bought

    2. Coupon / Dividend Income:Fund will earn interest income from the bonds it holds or will have dividend income

    from the shares

    3. Income Distribution:

    The fund passes on the profits it has earned in the form of dividends

    Disclaimer

    As the value of securities in the fund increases, the fund's unit price will also increase. You can

    make a profit by selling the units at a price higher than at which you bought. Although Mutual

    Fund does not guarantee the same.

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    Mutual Fund- How to invest in Mutual FundsSelection Process- 3 step process

    Step 1 Identify yourinvestment needs

    1. What are my investmentobjectives and needs?

    2. How much risk am I willing totake?

    3. What are my cash flow

    requirements?

    Step 2 Choose the right mutualfund.

    1. The track record of performanceover the last few years in relationto the appropriate Benchmark andsimilar funds in the same category

    2. How well the mutual fund isorganized to provide efficient,prompt and personalized service.

    3. Degree of transparency asreflected in frequency an d qualityof their communications.

    Step 3 Select the idealmix of schemes

    Investing in just 1 schememay not meet all yourinvestment needs. Youmay consider investing in acombination of schemes to

    achieve your specific goals.

    http://images.google.co.in/imgres?imgurl=http://cindysense.com/wp-content/uploads/stepstosuccess1.jpg&imgrefurl=http://cindysense.com/achieve-your-goals-one-small-step-at-a-time&usg=__kyFH3KkuWmiqMBioce-HhhRrBF8=&h=300&w=400&sz=81&hl=en&start=10&itbs=1&tbnid=sVJJtldBtuwYSM:&tbnh=93&tbnw=124&prev=/images%3Fq%3Dsteps%2Bto%2Bsuccess%26hl%3Den%26gbv%3D2%26tbs%3Disch:1
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    Mutual Fund- Which one to buy?

    Your Investment

    goal

    Capital

    PreservationGenerate Income Capital

    Appreciation

    Disclaimer

    As the value of securities in the fund increases, the fund's unit price will also increase. You can make a profit by selling theunits at a price higher than at which you bought. Although Mutual Fund does not guarantee the same.

    Based on your goals and

    risk tolerance

    Savings Bank Account Fixed Deposits Real Estate

    PPF Post office Monthly Income Scheme Gold

    Cash Funds Debt Funds Equity FundsMutual Funds

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    Mutual Fund Products Risk / Return Graph

    Lo Med Hi

    Liquid fund

    Ultra Short Term Funds

    Short Term Funds

    GILT & Bond Funds

    Hybrid & MIP

    Lo Med Hi

    Index Fund

    Arbitrage Funds

    Balanced Funds

    Diversified Funds (ELSS)

    Sectoral FundsDebt Equity

    >> Risk > Risk >Retu

    rnRetu

    rn