Over the next few chapters, we will discuss the various classifications of Equity funds. Mutual funds have three main categories Equity Funds Debt Funds Hybrid Funds Equity funds are the most popular as the returns offered by them outbid the debt and hybrid categories. Since the opportunities to get higher returns are available, it normally…
Market Capitalization ie. Mcap means the share price multiplied by the number of shares. if XYZ company issues 10000 shares and each has a price of 15, then the mcap = 10000*15 = 1,50,000. In the above eg: TCS MCap is 1377858.27 crores and Infosys is 581349.77 crores. Mcap shows how big a company is,…
When you opt for a Mutual Fund, the decision to buy/sell stocks is taken by the Fund Manager. Even though you provide the capital, you have no say in the stock-picking process. This could be an advantage if you are poor at stock selection and a disadvantage if you are smarter than the Fund Manager….
You might have already heard these words “Mutual Fund investments are subject to market risks, read all scheme related documents carefully.” AMCs and MF houses are supposed to provide this disclaimer in all their mandatory documents as well as advertisements. Have you ever thought about why this statement is actually required? The answer is that…
If you know what stock to buy and hold for life — then your job is super easy. Everyone else might have to go through countless buying and selling to find the perfect stock. Each transaction comes with charges & taxes. We are the rarest of the countries that even charge taxes for losses. Mutual funds on…
When you buy stocks, it is mainly considered an investment. Investment in stocks is what people do with their disposable income i.e. the amount left after consumption & savings. And investments rarely give a TAX benefit. Only one investment product in India gives you exposure to Equity and saves Rs1,50,000 per year of taxable income….
Assets Under Management (AUM) is a measure of the popularity of a Mutual Fund. When you sum up the investments done by all the investors you get the AUM. A higher AUM along with a growing AUM shows that more and more investors are continuing to invest their capital in the specific fund. Trust has…
The quantity of Mutual Funds allocated to you is called Units. In the last chapter we learned about NAV, we will understand the units allocated based on an example. Suppose you have a MF SIP of Rs25000 every month. The NAVs for these 3 months were January — 1141.42 February — 1171.64 March — 1082.22 We can calculate the units allocated…
NAV or Net Asset Value is an important concept in Mutual Funds. Most customers buy a mutual fund for a specific amount and for a specific period. For example, Rs25000 SIP every month. They are not really worried about the price of each unit and the number of units allotted. Since most MFs are linked…
Active means there is a direct involvement of labor & Passive means utilizing systematic or computer-generated instructions to do the stock pickings. “Buy index funds. It might not seem like much action, but it’s the smartest thing to do.” — Charles Schwab “The miracle of compounding returns is overwhelmed by the tyranny of compounding costs.” — John Bogle When…
