How to Invest in Mutual Funds? – Friend’s Query
Hey dude,
I need some help ..
Well, I hv around 20,000 spare money every month so I would like to invest it in SIP based Mutual fund .. I hv already invested in tax saving LIC scheme so now I dont want anything which has a lock-in period ..
So plz guide me with the help of 20,000 amt, which mutual funds should I buy ?? ..
And if I buy Mutual funds today and if i want some cash then can I come out of it in a month time or imeediately ?? .. I hv no idea how mutual fund works ?? .. Is it like shares only ??
Plz guide me ..
Hey Soham,
Nice to hear fro you. Here is the solution of your Query.
Well, First of all let me tell you in simple words that What is Mutual Fund And How it Works? Most of the people consider mutual funds as a Stock. But well, Mutual Fund is not a Stock but it’s the professionally managed portfolio of Stocks. Here the Fund Manager & his team analyze the Stock market on behalf of you and invest in the Stock.
You have Rs.20,000 to invest in the stock market every month. Now, this is such a small amount that, you can not diversify such a small amount in the portfolio of Stocks. Because if you go to buy a Stock of Reliance or HDFC than 1 share will cost you around Rs.1000-2000. Thus, achieving Diversification with such a small amount is impossible.
Now, Here comes the Mutual Funds. Mutual Funds pull the small amount of money from literally millions of people like you and me. Say for Example, 100 Crores, 2000 Crores or even more and invest whole of this Corpus in a Common Portfolio of Stocks managed professionally by the Expert Fund Manager.
The main advantage here is that, with such a large amount of Capital, it becomes really easy for a fund manager to diversify your money across the different sectors of the economy such as Automobiles, Banking, FMCG, Banking, Technology, Metals, Energy, Consumer Goods and many other economic sector. With just few thousand rupees you can not diversify in all the sectors.
Another advantage of Mutual Funds for professionals like you and me is that, Time. We don’t have time to analyze and watch the stock market on daily basis. And that’s why it is good idea to divert this money onto a professionally expert fund manager whose job is to manage your money day and night.
Thus, Mutual Fund is not a Stock but it’s the Portfolio Management Service in simple words.
Now, the question is that How to Select a Good Mutual Fund?
After 1995, the India opened for Private companies to launch their mutual funds. So right now there are literally several hundred mutual funds in the market that,
Selecting a Good Mutual Fund itself is a Job.
And in countries like USA, today there are more number of mutual funds in the market than actual number of Stocks. And here the concept of “Mutual Fund Rating” came into exist.
Following are the Best Mutual Fund Rating Agencies of India.
01) Valueresearchonline.com &
I Personally prefer the Valueresearchonline. They rate any mutual fund in 5 ratings. According to me, you can invest in any 4-star or 5-star rated mutual funds of India. These companies give the star ratings of the mutual funds on the several criterias such as,
- Past record of Performance
- Fund Manager
- Peer (Competitor) Mutual Funds return
- Return against the underlying Index (Benchmark)
- Advanced Portfolio Statistics
- And totally more than 100 such criterias
So now, you don’t have to ask anyone about which mutual fund to buy. And once you start investing in some 5-star rated mutual fund and after a year or so if it’s rating goes down to 3-star or so than you can immediately think of changing the fund and shifting to some other fund.
Now, the Question is that How to Invest in Mutual Funds? Well see. This is an extremely large topic & I have already covered this topic on this Blog. There are 18 Lessons you should learn to become a successful Mutual Fund Investor. Here is that Short Course. You will find it extremely information rich and useful so save it.
Mastering Mutual Funds – Short Course
You will find possibly all of your query solution and Myths about Mutual Fund investing in this short course. Many Bloggers around the world have tried to copy this course and that’s why I had to pay money to copyright this course. Because this is a truly original course. Here is its Copyright Certificate.
Now once you start investing in Mutual Funds, Build an artificial portfolio on Valuresearchonline and track them online. Here is the Link.
Valueresearch – Portfolio Manager
There are several small to large issues and queries to mutual fund investing. For that, I suggest you to go in the following Category of this Blog.
My Journey To Billionaire Club: Mutual Fund Investing
Now, let us discuss your another query. Well, yes. If you chose the open ended mutual funds than you can anytime exit from it even within a month. It will only attract 1.5% of Entry load.
My favourite Equity Diversified Mutual Funds are below. You can start SIP in any one or two of them
01) Reliance Growth
02) SBI Magnum Umbrella Contra
03) HDFC – Top 200
All of the above are 5-star rated funds having a proven past record of good performance and all of them are my favourite. However, you can invest in any 4-star or 5-star rated mutual funds.
Just go to my above “Mastering Mutual Funds – Short Course” and you will become master in mutual fund investing in just 48 hours…!!!
I hope that, this much of information will be useful to you.
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