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Thursday, December 1, 2016

Ladies, Yes you can buy mutual funds, check which one suits your needs

    This article is dedicated again to the beautiful ladies often puzzled between the investment options. The point is not that which product is right. Every product has a certain objective and investment philosophy attached. Every individual is different and so are their investment requirements. Few of us need to keep extra cash in hand, few of us are planning a trip abroad after 2 years, and few are saving for child's higher education. For every stage of life we have certain area to focus on. For these goals, one need to invest in the right investment vehicle.

    Financial awareness important for women

    #Mutual fund as an investment vehicle is an easy answer for all these worries. For every time horizon for our investment, there is a category of mutual fund.

    Mutual fund caters to investors of all risk appetite. From a fresher at a job to a middle aged employee, retired pensioner to a small retailer.

    Mutual fund has schemes designed which manages wealth depending upon the risk profiles of diverse set of investors with various time horizon for investments.

    For example, an investor who wishes to get fixed returns like bank deposits on his investments and has a investment horizon of less than one year can opt for debt funds like - liquid funds, ultra short term funds. These funds have very low risk and manages to offer better return than savings account and short term deposits. These funds invest in money market instruments, ultra short term government securities etc.
    An investor with time horizon of 1-3 years can invest in short term debt funds, dynamic bond funds. These funds are also low-risk products and offers higher return compared fixed deposits of banks of the similar tenure.
    An investor who has a medium term horizon 3-5 years can opt for balanced/hybrid funds which are debt centric. But also have some exposure to equity giving it better capital appreciation with a limited market risks. Investor with over 5-7 years horizon can look at equity based hybrid funds.

    Where the downside risk is mitigated by the debt portion and opportunity to take advantage of the upside of equity markets.

    For an young investor or any investor has a long term goal, pure equity mutual funds - like Large-cap funds are the best option to begin with. Over long term equity mutual fund is expected to give much higher inflation adjusted and risk adjusted returns.

    Why we are obsessed about ELSS mutual funds 
    5 reasons of choosing mutual funds over direct investments

    1. Individual good quality share comes at high price, where in mutual fund SIP can start with as low as Rs. 500 for monthly instalments
    2. Buying and selling direct equities within a year attracts capital gain tax, and high brokerage, mutual fund managers can keep transacting at any point of time, investors don't need to pay any taxes of he holds the equity scheme units for more than a year.
    3. Investment in mutual fund is manged by a experienced research and find management team which is difficult doing at individual level.There is a guideline defined in the asset allocation capping exposure to individual companies as well as sectors.
    4. Mutual Fund team has a risk mangement team in place which assures the quality of the investment and proper due-diligence to mitigate various risks which also enable fund managers to manage funds and sell risky security at right time.
    5. Liquidity - Mutual funds can be easily bought and sold online over few clicks and the payout is 1-3 days, making it convenient for investment.

    #Mutual funds #equity schemes

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