Avoid Dreadful Mistakes While Investing in Mutual Funds

Every day we come across advertisements in newspapers, magazines, hoardings, TV and internet and even on trains, buses and metros telling us to invest in mutual funds.

But before you invest you must know the mistakes which are to be avoided. Knowing them will make your investment journey smooth and will help you reach your investment destination or goal.

Let us look at these 6 mistakes which you should avoid

1. Investing without a goal or a financial plan

Investing without a goal is like racing without a finish line.

This is the most basic. Like the foundation stone of a building. It is important to think and plan for achieving a financial goal.

Example: A person aged 24 years who has just started working can have a goal to buy a car or house after few years OR can have a goal to save money for one’s marriage and then the expenses of rearing children as well funding their school and college expenses OR can have a goal of saving money for one’s retirement

Whatever the goal, it is important to plan and allocate money as per the various goals.

2. Investing without a budget.

Investing without a budget is like flying a plane without a fuel gauge.

If you don’t balance your earnings and spending, you will never save enough to invest which is a sure way to crash-land since you will never know when you ran out of fuel.

List down your monthly net income and the items and amount you spend every month. You must make a budget plan to ensure that you do not overspend by being emotional and impulsive.

Experts call this as a “Cash flow plan” which will capture each item of cash inflow and outflow.

You can do this by writing down in a diary or even entering the details in Microsoft excel in your PC.

Some people find it difficult even to save 10% of their net income because they are impulsive, emotional and like to live with comforts, whereas some others save more than 50% of their net income because they are disciplined, conservative and spend smartly only when required on the most basic needs.

You must decide on the level of savings that you are comfortable with as per your goal.

In addition to the monthly savings, whenever you get a lump sum amount such as bonus, gifts, inheritance, lottery etc. you must invest that as well.

Remember however the more you save today, the better your future will be as money saved and invested in mutual funds will compound and grow over time.

Hence it is very important to make and stick to the budget every month with full discipline. Only this will help you achieve your long term goals.

3. Investing without understanding your risk-taking ability

Investing without knowing your risk-taking ability is like buying a garment without knowing your size.

You do not know whether it is the right size for you and whether you will be comfortable wearing it.

A general rule of thumb is that the money which do not need for the next five years or more can be invested in equity mutual funds, while the money which you may need within the next five years should be invested in debt mutual funds and the money which you may require in the next six months should be invested in money market or liquid mutual funds

While this is a general rule, it is always recommended that you take a risk-profiling test which will scientifically bring out your risk taking ability.

Usually such tests do not take more than fifteen minutes and are available with any registered financial planner or a mutual fund distributor/broker.

The result of the test is that you will get to know your exact risk profile.

(The four basic types of risk profiles are cautious, conservative, moderate and aggressive)

Each risk profile will tell you how much percentage of your total money should be invested in equity, debt, liquid and in gold.

4. Investing in mutual funds without doing homework

Investing in mutual funds without doing homework is like trying to drive a car without obtaining a driving license.

“Never buy anything without doing adequate homework” is a generally accepted philosophy. This holds good for mutual funds as well.

After you have identified your goals, monthly investment budget and your risk profile the next step is to figure out which mutual fund schemes are suitable for you.

For this you can approach your financial planner or your mutual fund distributor/ broker who will advise you on select good long-term performing schemes.

You should not spread your investments in more than 3 or 4 top performing funds. Since it will increase your paperwork as well as tracking efforts without increasing your returns (example: if you are investing Rs 20,000 per month, spread it equally amongst the top 3 or 4 funds)

5. Not doing SIP in mutual funds

This is another major mistake which is completely avoidable.

Equity, balanced and tax saving (ELSS) schemes hold a portfolio of equity stocks and prices of equity stocks are never constant and move up or down based on various company-specific as well as general market and economic factors.

Hence the prices of mutual fund schemes (called as net asset value -NAV) keep moving up or down.

The best and only sensible long-term method of investing in mutual funds is through the SIP route (systematic investment plan)

The benefit is that when equity stocks and fund NAVs are down, you get more units for the same amount of investment and conversely when equity stocks and fund NAVs are down, you get lesser units for the same amount of investment.

Hence over the long-term, you get an average price and hence you are spared the emotionally demanding option of investing all your money only at a particular constant price.

Another benefit is that since you earn income every month, the SIP facility will ensure that a fixed sum of money is debited from your bank account, on a particular date of your choice every month.

This will ensure that you do not have to remember to invest every month as the SIP will put your investment on auto-pilot.

So earn, save, and invest and then finally… Spend a little… every month!!

Many people do reverse… they earn, spend and finally… invest a little… every month!

What do you think is the right approach to build your future..?

6. Not having the long-term in mind and being impatient.

This is a mistake which many investors make. This is more to do with their temperament and personality than with any other factor.

Many investors are temperamentally not suited as they keep watching the stock market and mutual fund NAVs regularly and remain confused about their decisions.

It is very strongly recommended that like your goals, you need to also give a sufficiently long time for your mutual fund investments to give you returns. This means that when you invest in equity mutual funds through the SIP route, you must think of your goals which are 10 or 20 or even 30 years away and you must be patient with your investments.

History has shown that in the long-term the Indian equity markets have given returns in the range of 13% to 16% p.a. (The time period for this is the movement of BSE Sensex from 1978 when it was 100 till January 2016 when it is around 24,000)

However it should be noted that the returns are not guaranteed and may vary based on the market movements.

Since, you have a long-term goal in mind the short-term market movements should not affect you and you need to remain calm and patient. Patience always pays.

Systematic Investment Plan – Providing a Wholesome Investing Solution

Have you ever given a thought on how you are saving or investing your money? I believe not! We all follow a monotonous schedule. We earn, spend and save some part of our earning. As far as, saving is concerned we never scrutinize all the alternatives that could be taken into consideration before investing. The whole mutual fund industry had worked on mouth publicity until a few years back. But, now the picture is changing. With the onset of technology in almost every field, the clients are becoming alert like never before. So, why leave the mutual fund industry untouched?

An impressive revamp called Systematic Investment Plan (SIP) has bred a new life in the sector. It amasses three different words namely, Systematic, Investment and Plan.

Systematic, meaning a consistent process. Anything which is endured over a long period through gradual but a fixed pattern.

Investment is a strategy of making money out of money. In short, it is a process of nurturing wealth.

A plan is generally an idea or a method of carrying out anything via proper channel. The universal design of a SIP includes deducting a particular amount from the account of the payee at a frequency as set by the investor, depending upon the type of SIP opted. This business carries on for a quantum of years and then the invested sum is returned to the client with interest as corpus.

Types of Systematic Investment Plan:

There are variegated Systematic Investment Plans available to befit the desideratum of divergent clientele base. They are as follows:

    1. Monthly Systematic Investment Plan: It is the most popular type opted by the clients. As the name suggests, Monthly scheme allows you to invest your money on a monthly basis. Every month, the amount is deducted from your account. The amount can be any sum of currency depending on your budget and your investment strategy. The monthly scheme inseminates the habit of regular and planned investment in the investors. This form of SIP is uncomplicated. Bulk investors are attracted towards this scheme owing to its flexibility and progressiveness.
    1. Daily Systematic Investment Plan: Have you ever heard of the phrase “Digging the well each day and quenching the thirst”? This phrase fits here rightly. The investors opting for daily scheme are the ones who plan their income-expenditure cycle on a daily basis. These clients believe in filling the pot drop by drop. Very steady and slow form of investment, Daily SIP is quite secured at the same time.
  1. Flexi Systematic Investment Plan: Businessmen and professionals who frequently switch their jobs need a plan where they can invest as and when they want. A scheme which gives them the desired freedom is called Flexi SIP. The Flexi SIP is an investment plan in which the investor can put in an inconsistent amount at different time intervals. There is no restriction either on the money or on time at which the SIP installment is paid. Hence, if the client has excess money in some month, he can put it in the SIP.

All the types of Systematic Investment Plans are exceptionally progressive. It solely depends on the client and his investment beliefs, which define his/her strategy of investing.

Balanced Funds Providing an Edge of Stability to Your Portfolio

Do you want to sail on two boats at the same time without fearing the toppling over? Sounds a bit far-fetched. But, the investing industry is a place that can metamorphose this aspiration into a reality. A balanced fund is an amalgamation of the two conflicting schemes of the mutual fund industry. The scheme merges the benefits of stocks, bonds and money market instruments in a single portfolio. A balanced fund can rightly be called an all-rounder.

As the name signifies, a balanced fund retains a position of equilibrium between the two contrary systems. It is a type of scheme that opens up an avenue for the investors who aspire for a scheme dispensing the twin benefit of capital appreciation and the security of fixed income. They are a better choice in terms of growth as well as safety.

It is a phenomenal scheme for the new investors. The scheme gives you a precise idea of how the equity and the debt funds operate in the multifarious market situations. Hence, after getting acquainted with the behavior of the capital market, clients can have a cognizance of the same. Although the balanced funds may seem to be a little less exciting than other mutual fund schemes, they still endow a decent return on your investment as well as shield the money.

The past few years in the history of the world economy have witnessed a widespread economic recession. The axis of investing has sharply transposed from capital appreciation schemes to more substantial funds. Therefore, the balanced funds are gaining a lot of importance in such situations. A balanced fund maintains a perfect counterbalance between capital returns and the protection of fixed return bonds. There is a 60:40 or 50:50 ratio shared between the two investment strategies. Sometimes the equity quota may rise as high as 75% depending upon the stock exchange scenario.

Balanced funds also known as hybrid funds are the most flexible schemes in the investing family. You can choose the proportion of the investment in equity and debt according to your risk bearing potential. Say, if you are willing to capture more of equity, then the ratio can be 75:25, 75% for equity and 25% for the fixed income instruments respectively. But, if you are more inclined towards security then 60:40 ratio can be exemplary for you. The flexibility of choosing between the diversification ratio is absent in the rest of the mutual fund schemes.

Therefore, by selecting the balanced mutual funds the client is able to earn the following benefits:

  • The aggressive growth outlook of the equity-oriented schemes is attained quickly.
  • The certainty of fixed returns charms the novice investors towards balanced funds with a view to safeguarding the money against the tantrums of the market.
  • Getting a mixed bag of returns is not possible in any other investing scheme. Thus, a balanced fund is the king of hybrid investment methodology.
  • Through this scheme, the investors are in a way paving the path for economic and infrastructural development.
  • By investing in the bonds and securities, the investor is indirectly facilitating in consolidating the economic development.

The Insights of Mutual Funds – Touching the Right Strings for Harmony

Determining the correct strategy of investment is a daunting mission, especially for a beginner. Often people jumble up savings and investment. Taking both as the synonym of each other is a flaw. The intention of investing is entirely opposite to that of saving. There is no point in penny-pinching if you are not able to multiply that money. Savings is just the summation of the money you accumulate over the years with a small interest accruing.

The traditional mechanisms of saving have lost their gravity. The continually reducing interest rates along with the narrow scope of accumulating money, have triggered people to switch on more lucrative schemes. To bridge the gulf between savings and investments an ingenious stratagem has been devised- Mutual Fund. Giving a new upsurge to the age-old practice of saving has created a sensation amongst the people. Therefore, mutual fund is magnetizing people to invest rather than merely save. One can say that mutual funds are the best resort for profit-seeking investors as well as security-oriented investors.

Mutual fund incorporates the notion of accumulation from the Co-operatives. Collectively, selling the produce to get an increased return as compared to individual sale is the axis of Co-operatives. Going by the same motto, Mutual Fund is the conglomeration of two words Mutual and Fund, where Mutual means sharing or pooling and Fund means a scheme. Therefore, a comprehensive interpretation of Mutual Fund indicates a plan that promotes joint investment practices to earn exorbitant profits.

The mutual fund companies employ competent fund managers to deploy the pooled money wisely that ultimately touches the zenith of gain. The fund managers judiciously invest the legal tender in variegated schemes which provide capital appreciation and security, contingent according to the call of the investors. Hence, by handing over your hard-earned money to the mutual fund companies, half your tautness is released. From that point, it becomes the obligation of the fund managers for delivering an increased return to meet the requirements of the investors.

The two primary concepts working in full swing behind the scenes to ensure profit maximization are:

  1. Rupee Cost Averaging is the notion of valuing the worth of a single penny invested. Replenishing the glass drop by drop will always prevent any chances of wastage at the same time, obstructs the likelihood of spilling. Likewise, annexing the investment gradually will always yield unparalleled corpus. For example, if you buy gold at varying valuations, then sometimes you will be able to purchase more quantity and at the other times less quantity for an equal sum invested every time. But, in the end, you will notice that your gains are averaged. Thus, Mutual Fund endorses the proclivity of regular investment in the investors.
  2. The power of compounding implies the capacity of the money to grow. Say, suppose a person who commences job at the age of 25 years will contribute more towards his retirement fund as compared to person who beings to work at the age of 35 years. It is quite evident from the example that the early you start the more benefit you will get. Therefore, giving an early start to your investment will surely provide a greater opportunity for wealth accumulation. So, plan and initiate your investment strategy as soon as possible.

Apart from the technicalities, Mutual Fund is the one-stop solution for different expectations of the investors like, accruing a higher return than the traditional saving techniques, accumulating wealth for future, shielding against sudden financial shocks, and the list goes on.

What Are Mutual Funds?

Mutual funds are those professionally managed investment pools that, in a way, show the performance of several varied securities like stocks, bonds, and shares. They are usually organized by an advisory firm for the purpose of offering the fund’s shareholders a specific investment goal.

With this, investors can buy shares of a mutual fund, for instance, the stock of a company. Anyone buying shares in the fund becomes a part owner and wants to take part often because of those investment goals. To manage the company, the shareholders choose a board of directors to oversee the operations of the business and the portfolio.

Most of the time, the value of these mutual funds are calculated once a day and that is based on what the fund’s current net asset value is. A real estate mutual funds is one that invests in the real estate securities from around the world.

The real estate mutual funds usually tend to concentrate the investing strategy on the real estate investments trusts and real estate companies. These real estate investments trusts are mostly companies that purchase and manage real estate with help from the funds that were collected from the investors.

A mutual fund NAV is a special type of company that pools together money from many investors and invests it on behalf of the group in accordance with a stated set of objectives.

Mutual funds raise the money by selling shares of the fund to the public, much like any other company can sell its stock to the public. Funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles such as stocks, bonds, and money market instruments.

Most investors pick mutual funds based on recent fund performance, the suggestion of a friend, and/or the praise bestowed on them by a financial magazine or fund rating agency. While using these methods can lead one to selecting a quality fund, they can also lead you in the wrong direction and wondering what happened to that “great pick.”

The past history is a good indicator, though not a guarantee, that a fund will do well. If you are investing long-term, the history will be of more importance than in a short-term situation as they say lightening rarely strikes the same place twice. When picking mutual funds, you have to rely on the fund manager so researching him/her is also a good idea. The fund is only as good as the one who is in charge of it.

You are probably aware that there are really a variety of investment opportunities available to you. The lower the risk of an investment means the profit won’t be all that spectacular, but sometimes a little gain is enough.

If you want to build a quality portfolio you have to focus on these three things:

1. The expected return on your investment.

2. The volatility of the market in that area.

3. How the performance of the mutual fund is directly linked to other aspects of the market.

Income Funds

These funds attempt to balance higher returns against the risk of losing money. Hence, most of these funds split the money among a variety of investments and plot funds in a mix of equities and fixed income securities.

Therefore, they have greater risk than those of fixed income funds, but lesser risk than those of pure equity funds. Depending upon the goal, an aggressive mix of funds would constitute more equities and fewer bonds, while conservative mix of funds would have fewer equities than bonds.

Bond Funds

Although long-term bond funds have done very well in the recent past, in large part due to declining interest rates, this will not always be the case. Long-term bonds can prove very volatile, with minor changes in the interest rate having an amplified effect on the fund.

Balanced Funds Own both stocks and bonds based on a popular belief that conditions unfavorable to common stocks are many times favorable to bonds and the opposite. They keep a balance between the two funds.

Money Market Funds

One of the reasons why many investors choose money market securities is that the investment can be made for a relatively short period of time. Furthermore, the level of risk is seen as being lower than on capital markets. Therefore, there is a lower risk of loss for someone who invests money into a money market fund as opposed to stocks or mutual funds.

Treasury Bills

T Bills are highly liquid and as such will have bid/ask spreads that are extremely low. Furthermore, those purchasing them will find that they are exempt from municipal and state taxes.

There are some investors who would like to get into money market funds, but find that purchasing them through financial institutions appears to be quite confusing, with all the different regulations and requirements surrounding them. But there is good news for people interested in buying T Bills.

Ordinary investors can actually buy them directly from the U.S. Treasury and there is a lot of information available about this on the Treasury’s website. So for anyone who wants an investment that is easily accessible, this could be an option that is definitely worth considering.

Money funds are also highly flexible, allowing the investor to buy, hold, or sell shares when he or she wishes. There aren’t any market restrictions when it comes to the timing of what you do with what you own. You’ll also be able to use these funds for checks, which can pay the day you write them. Mutual funds, can take three days before payment, making money market funds a better option.

As it is with an individual security, management is an important consideration, and the process of identifying a well-managed mutual fund is much the same. First, look at the fund’s performance over the last five or ten years and compare it to other funds with similar goals. Become familiar with the people on the investment committee.

Then consider what management is doing day-to-day: What are the fund’s largest areas of investment? What holdings are increased or reduced? What percent of the fund is in cash, considering the current state of the market? And what is management saying in its reports? The challenge to the mutual fund investor is selecting an investment company capable of superior performance taking into consideration the fund’s investment goals.

For investors who have a limited amount of time to spend on their portfolios and who want greater diversification, mutual funds are worth considering. But, as with individual stock, your due-diligence is critical, investigate before you surrender your hard-earned money to invest

Schwab Ditches Funds With Sales Charges

Imagine a salesman offers you a streaming TV service that offers the exact same movies and TV series that Netflix does, at the same monthly cost. The only difference: You have to pay a $100 entry fee in order to join.

It is hard to imagine anyone taking the competitor’s deal. Yet many investors acted in a similar way for years by purchasing load mutual funds instead of no-load alternatives.

When the first modern mutual funds arrived in the 1920s, load funds were the only type of funds available. Investors paid a fee to a broker or other intermediary in order to be able to invest. But these days, there are plenty of no-load alternatives to choose from. What’s more, historical data shows no substantial performance difference between load and no-load funds; in fact, Morningstar found that no-load funds have a slightly better track record in recent years.

Increasing numbers of investors now realize that paying more for an investment does not mean that the investment is better. The most recent evidence comes in the form of Charles Schwab’s announcement that it will stop selling mutual fund share classes that carry sales loads.

As The Wall Street Journal reported, Schwab will no longer offer share classes with loads to clients, though customers who already own shares in such funds may continue to hold them at Schwab. “It’s a low-volume business that no longer makes sense for us to administer,” a company spokeswoman told The Journal. (1)

The numbers support Schwab’s assessment. According to the Investment Company Institute, a mutual fund trade group, investors pulled more than $500 billion from share classes with loads between 2010 and 2014; over the same period, they invested $1.34 trillion in no-load classes. Many mutual fund firms offer some funds that would normally carry loads to retail investors on a load-waived basis, making it even more illogical for investors to pay for something they can get for free. Schwab’s decision is still a sign of things to come in the mutual fund market.

This trend predated the Department of Labor’s new fiduciary rules, but requiring a broader swath of financial professionals to place clients’ financial well-being first will certainly hasten the demise of load funds. Schwab has said outright that the new Labor rule was not the direct catalyst for its decision, but the changing standards may contribute to other firms’ similar decisions down the line.

Some mutual fund companies may abandon certain share classes as well, as more investors become savvy enough to avoid them. One company, Waddell & Reed, said in February that it would merge A-class shares – which charge a load up front – into institutional shares, which typically charge no load and offer lower expense ratios. Other mutual funds will probably continue to offer shares that include loads, if only to profit from the few investors who do not realize they could get a better deal elsewhere.

Fee-only financial advisers and other professionals who do not benefit from commissions on individual investment products have long steered their customers away from load funds. Mutual fund companies introduced back-end load and level-load funds largely because some investors had begun to resist the idea of paying a commission up front, but the fact remains that there is no good reason to pay a broker 5 percent or more in order to invest, no matter when you pay it.

If Schwab customers were still buying shares of load funds in substantial numbers, you can be sure that Schwab would be happy to keep offering them, at least in taxable accounts. Schwab’s decision to shutter its load fund business is a sign that too many investors have wised up to the fact that load funds are a bad deal.

TATA Mutual Fund: Intricate Investing Chores Simplified

The people who have a little knowledge about the investing industry might have come across the term AMC. Doesn’t it sound very technical? Do you know the full form of AMC? No! Then here is presenting the insights of AMCs and a brief overview of TATA Mutual Fund. AMC is the abbreviated form of Asset Management Company. Don’t be scared! It is not some rocket science which would baffle you. An Asset Management Company or AMC is a business firm that confers the amenity to invest in mutual funds.

All the investing schemes existing in the market are provided by one AMC or the other. The elementary task done by all the AMCs is to pool the money of numerous clients and invest it into the stock market. As we all know, the mutual funds serve as the proxy to equity investment. Thus, AMC is an instrument mitigating the back-breaking drudgery of the clients.

TATA group has signified its presence in almost all the sectors viz, information technology, finance, automobiles, consultancy services, etc. A symbol of excellence and certitude since 1868, TATA group has proved its worth in all the spheres it has set its foot. In this section we would discuss about the mutual fund segment of the company named TATA mutual fund.

You might have heard the phrase ” Family is like a tree and all the members are like its branches”. The phrase signifies the importance of a family. You might be thinking the authenticity of the phrase here. TATA group is the family tree which is referred here. And the branches are the diversified sectors. All the divisions cater to divergent necessities of customers but they all share the common roots. Therefore, TATA mutual fund is a sub-division of the main company, but it inseminates identical credos as the parent organization.

Glimpse of TATA mutual fund

This subsidiary of the TATA group finds its origin in the year 1995. Having a panorama of servicing the common people and not limiting its grasp to a small segment of citizens. The instigator of the parent company Late Mr. J.R.D. Tata, eyed on the spectacular growth prospectus of the company to forge the future. He strongly believed in the saying,”The best way to predict the future is to create it”. He was a man of wisdom and foresightedness. Moving ahead as mentored by the founder, TATA mutual fund has been able to utilize the far-fetched experience of the parent company in customer dealing and marketing as well.

Acknowledging all your desires you intend to fulfill via an investment, this AMC has successfully launched a mixed-bag of schemes for its clients. So, whether you may aspire for a scheme which will alleviate the tautness of your financial position after retirement or you are in search for a plan supplying capital appreciation which will fund your asset building in future. You will have it all done with the help of a single AMC.

Hence, investing in a mutual fund can be beneficial for you in many regards. The schemes will undoubtedly prove to be more effective than any other alternative method of saving.

Kunal Agrawal is a prolific author and has a deep understanding regarding the working principles of all AMCs. TATA mutual fund is on the priority list of the author.

Article Source: http://EzineArticles.com/9368601

The people who have a little knowledge about the investing industry might have come across the term AMC. Doesn’t it sound very technical? Do you know the full form of AMC? No! Then here is presenting the insights of AMCs and a brief overview of TATA Mutual Fund. AMC is the abbreviated form of Asset Management Company. Don’t be scared! It is not some rocket science which would baffle you. An Asset Management Company or AMC is a business firm that confers the amenity to invest in mutual funds.

All the investing schemes existing in the market are provided by one AMC or the other. The elementary task done by all the AMCs is to pool the money of numerous clients and invest it into the stock market. As we all know, the mutual funds serve as the proxy to equity investment. Thus, AMC is an instrument mitigating the back-breaking drudgery of the clients.

TATA group has signified its presence in almost all the sectors viz, information technology, finance, automobiles, consultancy services, etc. A symbol of excellence and certitude since 1868, TATA group has proved its worth in all the spheres it has set its foot. In this section we would discuss about the mutual fund segment of the company named TATA mutual fund.

You might have heard the phrase ” Family is like a tree and all the members are like its branches”. The phrase signifies the importance of a family. You might be thinking the authenticity of the phrase here. TATA group is the family tree which is referred here. And the branches are the diversified sectors. All the divisions cater to divergent necessities of customers but they all share the common roots. Therefore, TATA mutual fund is a sub-division of the main company, but it inseminates identical credos as the parent organization.

Glimpse of TATA mutual fund

This subsidiary of the TATA group finds its origin in the year 1995. Having a panorama of servicing the common people and not limiting its grasp to a small segment of citizens. The instigator of the parent company Late Mr. J.R.D. Tata, eyed on the spectacular growth prospectus of the company to forge the future. He strongly believed in the saying,”The best way to predict the future is to create it”. He was a man of wisdom and foresightedness. Moving ahead as mentored by the founder, TATA mutual fund has been able to utilize the far-fetched experience of the parent company in customer dealing and marketing as well.

Acknowledging all your desires you intend to fulfill via an investment, this AMC has successfully launched a mixed-bag of schemes for its clients. So, whether you may aspire for a scheme which will alleviate the tautness of your financial position after retirement or you are in search for a plan supplying capital appreciation which will fund your asset building in future. You will have it all done with the help of a single AMC.

Hence, investing in a mutual fund can be beneficial for you in many regards. The schemes will undoubtedly prove to be more effective than any other alternative method of saving.

Kunal Agrawal is a prolific author and has a deep understanding regarding the working principles of all AMCs. TATA mutual fund is on the priority list of the author.

Benefits of Portfolio Management Software

When it comes to small personal investments and household budgets, most people have no problem using programs like Microsoft Excel, Google Sheets, or another simple spreadsheet tool to track and manage their finances. These tools can also be useful to the financial professional, but usually there comes a time, especially as client lists grow, that simple spreadsheets and free database software just can’t keep up. When it comes to managing corporate accounts, and tracking dozens of clients with multiple IRAs, 401(k)s, offshore assets, structured settlements, stock, bonds, and brokerage trading accounts, these tools are usually insufficient. It’s at this point that most financial professionals turn to advanced portfolio management software.

These sophisticated programs can be used as everything from a corporate pension management solution to a comprehensive hedge fund system. They provide real-time analysis of various markets, including simulations and advanced trend projections, as well as in depth statistics and reporting on each individual income stream and asset class. This becomes key when dealing with clients with high net-worth or dealing with large, highly-diversified corporate accounts. Fund managers also rely on these to create comprehensive hedge fund systems that allow them to closely track and monitor the (usually volatile) high-risk investments that make up these funds. These programs also very often used by those with highly-diversified portfolios as an asset management software solution. As personal or corporate wealth grows, it generally behooves investors to diversify their wealth over as many asset classes as possible. Good portfolio management software makes what would once have been a fraught undertaking, quite simple.

Choosing a Portfolio Management Software

When it comes time to move on from basic spreadsheets to more robust asset management software, there are a few things you need to consider. First, are you managing finances for a corporation, individual clients on a case-by-case basis, or just for your own personal income and revenue streams?

If you’re working with a corporation, be sure to select a requirement that works with any other systems already in place, and make sure it meets your audit and regulatory requirements. Different industries have differing standards, so this will be something you have to research about your particular area. In this case, you’ll want something that’s been heavily vetted by the relevant members of your organisation, particularly those in charge of maintaining privacy and security, as well as regulatory compliance and reporting standards.

If you are an independent finance professional, you have all the same concerns as a corporate finance manager seeking a hedge fund system or other portfolio management system, as well as a few additional ones like keeping client accounts separate and secure.

Myths That Stimulate Clients Away From SIP

Investing is the best way to accumulate for a rainy day, and the mutual fund can be seen as the one-stop destination for simplifying all your investment chores. There are two different ways through which one can put their hard-earned money in a scheme viz, SIP and Lump Sum. SIP can be the best choice for you as it is one of the two methods of investing in a mutual fund. It is a regularized investment mechanism which allows the investors to adopt a slow but consistent path of converting their savings into investments. As it is essential to select an appropriate scheme for investing, it is an equally important task to understand the insights of SIP before commencing your investment.

Due to an ignorant attitude and lack of time from the busy schedule people tend to make mistakes while opting for their investment methodologies. There are a few common mistakes that investors commit, unknowingly. So, to invest and gain from it, you must avoid the following misconceptions.

Myth 1: SIP facilitates meagre investments

There is a myth prevailing in the mind of investors that SIP was launched just to facilitate those clients who want to invest small amounts monthly, and it is not suitable for those who intend to put a relatively greater amount on a regular basis.

Reality: SIP is an overall scheme which simplifies the investment requirements of all the clients, whether the amount to be invested is big or small. Every client has the liberty to select an amount for investing consistently over a stipulated period of time. For example, a client is free to take up an amount as low as Rs. 1000 and as high as Rs. 50,000 depending on the affordability.

Myth 2: SIP doesn’t house surplus amount

Once a client begins an SIP plan, then he/she cannot deploy a surplus amount, if any. Investors have a notion that if they take up an SIP with a specific amount, then they are not eligible to put an extra amount at any point of time.

Reality: SIP offers the facility of top-up to its clients. This means that a client enjoys the freedom of investing an extra amount along with the regular installment amount. For example, if a client has opted for an SIP plan of Rs. 3000 per month and in a certain month he is having additional Rs. 6000 which is lying unused, then he is free to park it in his SIP account.

Myth 3: SIP is scheme of mutual fund

Due to its comparison with other bank deposits like RD, SIP is considered as one of the plans and not a method which assists to put money in mutual funds. Investors have the idea that they are placing their money in SIP and not through it.

Reality: It is an investment method and not a plan. SIP acts as a postman who carries the money of its clients to the scheme which they have opted before. This means that it is just the carrier which eases the work of investors as well as mutual fund companies.

Myth 4: SIP should be initiated in Bullish Market

The clients believe that the best time to undertake an SIP is when the market is trending upwards. They believe that a rising market will provide better returns as compared to any other time.

Reality: It is true that SIP provides a facility to take the advantage of bullish as well as bearish market conditions. A client can commence investing as and when he wants. Investors need not wait for a certain market situation in order to initiate the investing process. SIP renders an averaged return over a prolonged period of time by enabling the client to continue investing whether the market is low or high.

Myth 5: SIP can be taken up for a few schemes only

The clients believe that SIP is available for a handful of schemes. Tax-savers, liquid funds, etc. does not allow the clients to select SIP as their investment mechanism. This misconception has stimulated the clients away from some of those schemes which are capable of providing prolific returns.

Reality: SIP is a technique which is available for each and every scheme operating under mutual funds. All the close-ended plans allow the use of SIP for making a regular investment.

To conclude, the clients should get rid of the misconceptions attached with SIP so as to acquire wholesome benefit of investing.

Akshita is a mutual fund expert and has published many articles on SIP and mutual funds like Reliance Mutual Fund, Birla Sunlife Mutual fund, Tata Mutual fund and more, which have presented a clear picture of the investing industry. Her educational and family background in banking and SIP investment plan has given her the much needed experience which is visible in her writings.

How Mutual Funds Can Make You a Millionaire

Mutual funds are a way of parking your surplus money in the schemes which are according to your investing needs. Every one of us wants to be at the peak of success and earn a lot of money to lead a luxurious life. It is true that all of us cannot own a company as big as Microsoft, but still it is possible to earn a notable amount for being able to afford a lavish lifestyle. However, we all save some money through our entire life for the rainy day or to fulfil our future needs. But, small savings are not sufficient to accommodate the requirements. The reason being, savings do not provide many returns on the amount deposited in the banks. While, investments in mutual funds would bring up the required profits from the money which has been deployed into them.

We often hear our elders say that earning money is not easy, and it takes an entire lifetime to accumulate petite amount. It was true back then. Since the inception of mutual funds, there has been an easier way to invest and grow your wealth easily. Here are some important points which could help you to multiply your money manifolds:

    • Hike investments through a systematic process: Systematic investment is the most preferred investing method which would let the clients invest at regular time duration for a stipulated period of time. The clients have to be very consistent in adding up to their investments at a very slow pace. If you invest a lump sum, then it might not be possible for you get the benefits of the bullish and bearish market scenario, and you will not be able to get the maximum returns for your investments. Any sweet dish gets sweeter as we add sugar to it gradually. But, if we put the entire amount at once then there are chances of getting the dish spoiled. Hence, to savor the sweetness of your investments, invest through monthly SIP in your selected schemes mutual fund scheme.
    • Be focused on long-term financial goals: Mutual funds provide schemes for each and every client. The schemes include equity, hybrid, debt, etc. All these plans have been provided so as to attract customers from each and every segment to actively participate in mutual funds. The investment in mutual funds may facilitate the clients to invest in even short-term schemes, but the returns from such a plan are not at par with that of long-term mutual funds. Thus, it is advised by the financial experts that the clients must aim for investing over a longer time spell. It will help you to bring out the maximum gains from your investments.
    • Identify your cash inflow and outflow: A cash surplus is one of the most prominent factors in determining the amount which you can afford to invest. The cash surplus is calculated by subtracting the inflow of capital with the outflow. If the balance is positive, then you have that much amount left for investing, and if you have a negative balance, then that shows your borrowings. If the clients have an extra surplus then only they are capable of investing in mutual funds. So, it is necessary to manage your income and expenditure in a way that will let you have some unused amount for parking it at the correct place through the mutual fund schemes.
    • Monitoring the existing investments: Though it is said that mutual fund schemes provide returns during the long run, still one should not just invest and forget. A timely review of the plans is required in order to maintain the balance of returns. There are fund managers who allocate the funds and ensure the returns to the clients. However, it is the duty of the clients to carefully spot the difference between the promised and the actual returns because it is their hard-earned money that has been deployed and not anyone else’s.
  • Remove the under-performers from portfolio: It happens many times that we go for shopping and instantly like something. We buy and bring it home. But, after using it for some time, we realize that it is not as per the standards and will result in loss of time and money. So, either we return it or give it to someone else. In the same way, the clients should review their portfolio at regular intervals and discard the mutual funds which are not productive. As the money is invested in the wrong places, it is necessary to clean the portfolio at regular intervals as the non-productive schemes will result in wastage

To conclude, mutual funds can help you to be a millionaire if you abide by some necessary rules set by the experts. So value the importance of your money and make the maximum use of it.