Mutual funds have emerged as one of the most popular investment avenues for all kinds of investors. Its popularity can be understood from the fact that most of the investors now wish to participate in the equity market via mutual funds. In fact, the mutual fund returns over the past few years have outperformed most of the other investment avenues. Apart from the consistent returns, there are many other benefits of investing in mutual funds. In this article, we will walk you through the key benefits of mutual funds.
What Are The Benefits Of Mutual Funds?
• Professional Management
Mutual funds collect money from multiple investors and invest them across various asset classes with the help of professional management. The fund managers of the mutual fund companies are highly qualified and have years of experience in investing money. Another advantage of mutual funds is that the fund manager has a team of experts who extract information from every corner of the market. This kind of expertise generates faith and assurance among the investors that their money is in the safe hands.
Diversification is always important to build a good portfolio. Mutual funds invest the funds collected from various investors in different investment avenues. By spreading the money across a wider spectrum, the risk levels decline considerably. The mutual fund unit holders do not have to depend on the growth of a particular sector or stock when the portfolio is diversified. Thus, diversification is another benefit of mutual funds.
• Smaller Capital Outlay
Another advantage of mutual funds is that it requires smaller capital outlay. To build a diversified portfolio, a large investment is required in general. But in the case of mutual funds, the money from multiple investors is pooled together and invested in a diversified portfolio. Thus, an individual investor investing in the mutual fund gets the benefit of the diversified portfolio even with a smaller capital outlay.
• Economies of Scale
Mutual funds purchase and sell securities in large volumes. This makes the transaction cost much lower than what a normal retail investor would pay if he purchases or sells it through the stock broker.
• Easy to Invest
The biggest benefit of mutual funds in India is that it is easy to invest in them. You can start investing in mutual funds once you know your investment objective. Investment in mutual funds can be made depending on the schemes that suit your need and time duration. There are many types of mutual funds in the market and you can invest easily in any of them. Moreover, after investing you are not required to pay any further charges.
• Liquid in Nature
One of the benefits of mutual funds is that they are liquid in nature. The open-ended funds can be redeemed at any time. In liquid funds and debt funds, the redemption money is transferred into your bank account in T+1 days. In the case of equity funds, the redemption money is transferred into your bank account in maximum T+3 days. This makes mutual funds very popular because you have the funds available at your disposal whenever you need them.
• Invest as Per Your Needs
There are various types of mutual funds available in the market and you can invest in any of them based on your needs. Select the mutual fund that suits your risk appetite and financial goals. Various products of mutual funds have different advantages and you must analyse each one of them to select the best for yourself. Also, you can make an investment in the mutual fund of any amount you like by way of an SIP or lump sum. The amount of SIP can be as low as Rs. 500 per month.
• Disciplined Investing
The main benefit of investing in mutual funds is that it makes you a disciplined investor. With SIP in mutual funds, you invest in every phase of the market and avoid taking the wrong decisions during panic situations in the market. Systematic Investment Plans help the investors in achieving their long term financial goals successfully. If a disciplined investing approach is not followed then you might end up spending on things that do not hold much utility. In addition, SIP is the best way to cut expenses and eradicate emotions from the investment process.
• Various Modes of Investment and Withdrawal
Another benefit of mutual funds is that there are various modes to invest and withdraw the money. Investment in mutual fund schemes can be made in a lump sum or Systematic Investment Plan, systematic transfer plan of transferring money from one mutual fund scheme to another, etc. There are also many ways to withdraw money from mutual funds like lump sum withdrawal, systematic withdrawal plans, etc. Therefore, the choices available to invest and withdraw money is a big benefit of investing in mutual funds in India.
• Helps You Save Taxes
One of the benefits of mutual funds in India is that they help you save a considerable amount of tax. Equity-Linked Savings Schemes (ELSS) are diversified equity mutual funds that qualify for tax benefit up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act. Moreover, long-term capital gains made below Rs. 1 lakh in a single financial year are also tax-exempt.
The above mentioned are a few of the benefits of mutual funds. As a beginner or a seasoned investor, one must aim to invest in the mutual funds for the long term. Mutual funds have rewarded the long term investors handsomely. With the increasing popularity of mutual funds, expect many more types of mutual funds to hit the market. If you need any assistance for investing in the mutual fund market, you may contact IndiaNivesh Ltd. We suggest the right mutual fund for you after understanding your financial goals and tenure of investment.
Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.
Liquid Funds – Best Liquid Funds to Invest in 2019
‘Are mutual funds meant only for long term equity investing? Or Where should I invest my money for secure and steady returns?’These are a few questions that many investors seek answers to. A quick search online for the right fund to invest can make things a bit worse. The presence of numerous categories and funds to choose from can be overwhelming for new investors or sometimes even the seasoned ones. So where should you invest for the short haul? Have you heard about Investing in Liquid Funds? What are they?Liquid funds are open-ended mutual fund schemes that invest in debt market instruments with maturities up to 90 days. Liquid funds are usually associated with lower risks and thus deliver relatively safer returns. Liquid funds primarily invest in instruments such as Treasury bills, commercial papers, government securities and so on.Liquid funds India has a slightly different NAV calculation structure when compared with other mutual funds. The NAV or the net asset value of liquid funds is calculated for 365 days at the same time. Unlike other debt funds where the NAV is calculated at the end of a business day. There is no lock-in period in liquid funds.As is the case with any other mutual funds, you can place a request to redeem NAVs of liquid funds at any point in time. The order to redeem the units will be placed by 2 pm on the current day or the next business day if you miss the time slot. In such cases, the NAV for the previous business day would be considered.Why you should invest in liquid funds?Liquid funds have one of the lowest risks associated as compared to other mutual fund schemes. This makes them ideal for investors who are not willing to take a lot of risks on their investments. And unlike some other funds, liquid funds do not have any exit loads.Even if you invest in the best liquid funds, you may not receive returns like the equity mutual funds. Instead, you will receive a steady stream of income without taking many risks. Liquid funds are ideal for individuals who have some spare cash and are looking for a way to park it.Redemption of mutual fund NAVs usually takes 24 hours to process. If you were to place an order to redeem your units, the earliest it would be done is the next business day. The best performing liquid funds can offer returns anywhere between 6% - 8%, which is much higher than the standard interest rates that banks offer. The low-risk factor along with comparatively handsome returns is what makes liquid funds an interesting proposition. Liquid funds in IndiaAs an investor, you must carry out your due diligence before investing in any mutual fund for that matter. The following are some of the parameters that you must consider before investing in liquid funds.- Fund ObjectivesMost of the instruments that are a part of liquid funds mature within 60 to 90 days. This ensures that there isn’t much fluctuation when it comes to the NAVs. This also prevents major variations in the NAVs. If a rating agency down rates a company, the NAV of even the best liquid funds can take a beating. Though they are not risk-averse, when compared to other mutual funds, you can rely on their stability.- Potential returnsKnowing the kind of returns that you can expect will help you decide with more conviction whether you want to invest in liquid funds India or not. When you consider historic data, liquid funds are known to return between 6% - 8% annually. Now if you look at the interest rates on offer by banks (on an average 4% annually) the liquid funds perform quite well. Though one cannot guarantee returns in mutual funds, in most cases you will be able to redeem your units in the green.How should one evaluate liquid funds?It should not come as a surprise that you would need to do some background work to get your hands on the best performing liquid funds. The following parameters should help you zero down on the top performing liquid funds.- Fund expense ratioMutual funds also require administrative work to be completed in the background. Asset management companies usually charge them via expense ratios. In other words, it shows the operating efficiency of a fund. A lower expense ratio ensures that you will walk away with a higher return percentage.- Returns of the fundIt must be noted that the past performance of even the top performing liquid funds is in no way an indication of the future returns. However, looking into history will help you better assess a fund. Top 8 Liquid funds for 2019The following is a list of the best liquid funds to invest in 2019. Here is a glimpse of the funds and their details briefly. The above list contains some of the best liquid funds 2019 has on offer. You can consider the above funds and take a final call on which fund suits your investment profile. ConclusionThere are a few strong reasons why liquid funds have garnered so much interest in recent years and a place in the portfolio of various investors. Their shorter maturity dates ensure that fund managers are not in a constant tussle to manage redemptions.If you are considering parking your money for a short period, then just take a pick from the best liquid funds. It would offer you stable returns while allowing you to forget about the fund, until any short-term goal demands your attention. The low risk and steady returns make liquid funds, an ideal investment for short to mid-term goals. Investors who have been in the habit of investing in fixed deposits and savings accounts will find the best liquid funds an interesting option to invest in. If you were to receive any dividends on these funds, you need not worry about taxes, since they are tax-free in your hands. To sum up, if you are someone who wants to make their money work hard, then you should definitely not let go of the Liquid Fund option. Our team at IndiaNivesh constantly encourages customers to take advantage of this instrument. Our expert yet friendly team can hand-hold you to getting started and suggest you the best liquid funds to consider.Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.
How to Buy Shares – Steps to Buy Shares Online in India
How to Buy Shares?If you are worried about share trading or investing in the share market, let us tell you that you are not the only one. New investors with limited knowledge are scared of losing their entire or part of their portfolio. However, with knowledge and disciplined investment, the risk can be mitigated and share trading can prove to be one of the most profitable investments to build one’s investment portfolio in a healthy manner. What are stocks then?Before moving on to answering how to buy shares, it might pay off to understand what are shares and why to buy them. It is one of the ways to invest and grow your capital. If done well, stocks can beat many other investible instruments in returns.There are quite a few other perks of buying shares apart from attractive returns. For starters, you become a fractional owner of the company, if the company does well, you can receive bonuses in the form of additional shares or dividends and so on. Stocks or shares of a company are a part of their ownership, which gives the shareholders a right to partake in the profit (and loss) of the company and a right to vote in the shareholder meetings.Before you can buy shares online, a company must be listed on the stock exchanges. Companies first must declare IPO or Initial Public Offering and get listed on the stock exchanges. Then you can buy shares online from either the Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE). You can then place an order via your broker to buy or sell the shares. The below steps will answer how to buy shares online and at the same time, how to buy shares for beginners. How to buy and sell shares for beginners?If you are pondering over how to buy shares, there are two primary ways of doing so. • You can buy and sell your shares with the help of a broker.• You can buy and sell your shares with the help of a financial institution, that offers seamless integration with a Demat account. In this case, the bank or the NBFC acts as your broker.Buy shares in India for beginnersFor your question on how to buy shares, here are all the steps involved.1. Find a brokerNumerous firms are offering you services when it comes to buying and selling of stocks or shares. It is worth spending some time on zeroing down a broker before you start buying or selling stocks. You can consider factors such as SEBI registration (securities and exchange board of India), membership of stock exchanges, brokerage costs, etc. before deciding. 2. PAN CardThe next step in how to buy shares online in India involves your PAN card. You are obliged to provide your PAN card number for all financial transactions. If you do not have a PAN card, it is time that you get one at the earliest. Without a PAN card, you will not be able to invest in the stock market. 3. Open demat and trading accountAs long as we are answering how to buy and sell shares, the first and foremost requirement is a demat and a trading account. The demat account is a placeholder where all your stocks and shares will be held electronically. You can think of it as a bank for your shares. Where you can deposit (buy) new shares or withdraw (sell) existing shares. The two major depositories in the country are NSDL and CSDL. You can open demat and trading accounts with a broker like IndiaNivesh Securities Ltd. 4. Knowing your depositoryThere are two primary depositories in the country. They act as a bridge between you, the company whose shares you want to buy and other shareholders. The depositories ensure that you have access to seamless paper-less transactions. These depositories transact the shares via agents known as depository participants (DP). And a DP can either be a bank, a broker or a financial institution. 5. Buy or Sell SharesYour broker acts as the connection between you and the buying or selling of shares. How to buy shares? You let your broker know the number of shares that you want to buy, the price at which you wish to buy them and the number of shares also. They will then purchase the shares on your behalf. Of course, there is a time limit until which the orders are valid. Post which, the orders are canceled, and you will have to place fresh orders. The same process applies to the selling of shares also. If you are wondering how to buy shares of a company that you always wanted to, here are some easy steps to do so after the steps mentioned above are fulfilled. • Keep the money in your savings account that is linked to your demat and trading account.• Finalize which shares you want to buy, either using an analysis method or recommendation.• Place an order for buying shares at a specific price point.• Keep reviewing your positions regularly.The steps to buy shares in India for beginners remain the same. During the initial days, you can take the recommendations provided by the research team of brokers, before you come up with your method of buying or selling. If you are wondering how to buy shares online, there are several brokers or banks with whom you can register and create a demat account. And then you can follow the above steps. There are two major ways in which you can earn money in the stock market. Firstly, buy a stock at a lower price and sell the same at a higher price. Easier said than done, as you would never know when the price is low or high even with the price-earning ratio calculated. The easier option is to invest in good-quality stocks of healthy companies and hold it for a longer tenure.Alternatively, if you hold on to shares, companies might pay you dividends. They will first trace who are the shareholders either through NDSL or CSDL and deposit the dividend amount directly to your account. Consider this example, you buy 100 shares of a company AS Technologies at INR 250 each. If the price of the shares were to reach INR 350, you would make a profit of INR 100 per share i.e. INR 10,000. If the company is doing well and they declare dividends at INR 10 per share, the company will deposit INR 1,000 for the shares that you hold. The stock market is vastly operated electronically, thus ensuring that you do not have to worry about how to buy and sell shares or how the share market works. You can simply follow the steps mentioned above and your ‘how to buy shares online’ question will be answered.Though buying or selling of shares or even the stock market comes with inherent risks, the results in the form of potential returns are quite rewarding. Experts from IndiaNivesh will be able to guide you to understand the best way to invest in the share market systematically while ensuring operational ease. Depending on your risk appetite and financial goal, our experts will aid your share market investments for a healthy portfolio in the long run. Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.
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