What is mutual fund?

Investing in mutual funds is like investing your money on auto pilot mode where instead of your taking any investment decisions, a mutual fund company hires experienced fund managers who are responsible to take most significant decisions regarding investing your money. Mutual fund companies create a pool of investment from investors and invest this pooled money in various securities..

Are mutual funds regulated?

Yes, mutual funds are regulated by Security and Exchange Board of India (SEBI). SEBI makes the policies for mutual funds and also regulates the mutual fund industry. SEBI constantly lays guidelines for the mutual funds to safeguard the investors’ interest.

Is expert’s advi necessary to invest in Mutual funds?

A lot of investors have variety of financial goals at regular intervals and they do not know to achieve them so you will need a person who can guide you through the ups and downs in the market to reach your financial goals that you have planned throughout your life span. Financial advisors showcase the best techniques on how you can save your money, invest it in various financial assets through a range of platforms and ultimately grow your fortune over a period of time. If you have specific financial goals like tax planning, retirement plans, education planning for kids, buying house etc they can help you in understanding your goals from the investment point of view and provide you with a set of asset allocations so that you can reach your goals in desired time.

Can I invest in mutual funds through Cash?

Yes, cash investments up to INR 50,000 per investor, per mutual fund, per financial year can be made in mutual funds. However, any repayment (redemption/dividend) is made only through bank channel.

How SIP in mutual fund works?

SIP draws benefits from rupee cost averaging and hence it is the best strategy for investing in volatile market for efficient risk mitigation. For example, if you start your investments of Rs. 5000 per month via SIP, the money will be debited from your account every month and will be invested in the mutual funds that you have chosen for systematic investment plan (SIP). Hence SIP is known as the most disciplines way of investing money to achieve your financial goals.

What is NFO?

The term New Fund Offer (NFO) in mutual funds is similar to IPO (Initial Public Offering) in share market. It is an opportunity to subscribe to a particular scheme through limited period offer. Mutual fund companies offer investors to purchase mutual fund units within pre-defined offer period through an offer price. NFO investors usually generate good returns post listing.

Who should invest in mutual funds?

A person who is looking for tax saving, professional management of portfolio, stable growth, regular investment option, good liquidity, better returns, ease of investment, protection against inflation should invest in mutual funds.

Can NRI’s invest in mutual fund?

NRIs are allowed to invest in mutual funds in India on a repatriable or non-repatriable basis subject to regulations prescribed under the Foreign Exchange Management Act (FEMA). For general NRIs (not from USA and Canada) the process of investing in Indian mutual funds is as simple as it is for the Indian investors. They just need to comply by certain norms set by the country they are based in.

What are capital gain bonds?

CFS offer Capital Gains Bond under Section 54EC of the Income Tax Act, 1961. These bonds are being issued as ‘Long term specified assets’ within the meaning of Explanation (b) to sub-section (3) of Section 54-EC of the Income Tax Act, 1961. Those desirous of availing exemption from capital gains tax under Section 54 EC may invest in these bonds. Capital gains arising from transfer of Long-term capital assets can be invested in these bonds within a period of six months from the date of transfer of the asset for getting exemption from the capital gains tax. Such Bonds are issued by SIDB, NHB, NHAI and REC.

What is rupee cost averaging?

Rupee cost averaging helps us to against the volatility of the market. In the rupee cost averaging approach, you invest a fixed amount of money at regular intervals irrespective of whether the markets are going up or down. The rupee cost averaging ensures that one can buy more units when the markets are low and lesser units when they are high. This approach helps an investor to bring down the average cost per unit over the long-term.

What is power of compounding?

Mutual fund investment system is deliberately constructed to make best out of the power of compounding. When you keep your money invested for long term, you get maximum benefits from compounding.

How mutual fund works?

Mutual funds are managed by professionals who have expertise in financial market. The pooled money invested by various investors is invested in various securities. Mutual fund companies decide when to invest, where to invest and how much money should be invested in a specific financial asset class. Generated profit is distributed among investors as per the proportion of their investments

What are regular mutual funds?

A regular plan is mutual fund plan where you are investing through an intermediary like advisor, broker, or distributor. In a regular plan, the mutual fund company pays a commission to such intermediaries.

What is exit load?

Mutual fund companies usually collect some amount when they join or leave a particular mutual fund scheme. This fee is called load. There are two types of loads in mutual funds; entry load and exit load. The amount charged while entering a scheme is called entry load while the amount charged while leaving the scheme (redemption) is call exit load. SEBI has discontinued the entry load since August 2009. Equity scheme exit load is 1% in case withdrawal is made within 12 months of investment date, on the other hand, there is not exit load if withdrawal is made after 12 months. However exit load varies from scheme to scheme for Debt Schemes

What is consolidated account statement?

The consolidated account statement (CAS) is a single document which contains the details of transactions and investments across mutual funds and other depository accounts that an investor might have.

What is mutual fund SIP?

Systematic Investment Plan (SIP) is an investment technique or financial instrument offered by many mutual fund companies through which an investor can invest small amounts in mutual funds periodically instead of lump sums. With the help of financial advisors, one can properly structure the SIP and set the investment frequency as fortnightly, monthly or quarterly depending on individual’s cash flow.

What is NAV?

Asset Value (NAV) is simply the current market value of a mutual fund unit. This market value per fund unit determines the current overall cost of mutual fund. NAV is simply the price per share of the fund. Likewise shares have a share price; mutual funds have a net asset value. The performance of a particular scheme of a Mutual Fund is indicated by Net Asset Value (NAV).

What is ELSS?

ELSS or Equity Linked Savings Schemes are mutual fund investment schemes that help investors to save income tax. Hence they are also known as tax-saving funds. These schemes invest a large percentage of their portfolio in equity and they have a compulsory lock-in period of 3 years for tax saving purpose, which is the shortest amongst all tax saving instruments.

How can I track my portfolio?

National Securities Depository Limited (NSDL) and AMCs (Asset Management Companies) send monthly account statement where you can track the performance of your portfolio. You can also login to your portfolio through Chitale Financial Solutions’s website or app to track the fund performance or your investment journey.

Can an investor appoint a nominee for his or her investments?

Yes, you can appoint a nominee. However, nomination facility is just a convenience; it does not give any legal rights of ownership to the nominee and can be challenged in the court of law. It is always advisable to prepare a will in advance so that there is a transparency in the ownership of financial assets.

Why term insurance is always a better option?

Term insurance plans are much easier to understand and provides affordable coverage than other insurance plans such as endowment policies which combine risk cover with savings. The premiums of term plans are much lower than other plans.

Why health insurance is necessary?

Health insurance is very important to safeguard yourself and your family. Expenses from unforeseen illness can drain your saving. If you cover yourself and your family with adequate health insurance, you can manage your medical expenditure without disturbing your savings. Some insurance provider also offers cashless treatment so you need not to worry about reimbursements.

How much one should invest in debt or equity schemes?

It totally depends on the financial goals and the risk appetite of an investor. It may vary from person to person according to financial objectives. Your mutual fund distributors could help you out in choosing the best debt or equity funds as they are more aware about the funds and market performances.


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Mutual fund investment is subject to market risk, read scheme related document carefully before investing.