What is Mutual Fund | Basics

Basics of Mutual Fund, Opportunities of MF schemes and Learn types of MF investments. The amount deposited by a large number of investors is called a mutual fund, which is put into a fund. The fund manager uses his investment management skills to invest this money in various financial instruments. Mutual funds invest in many ways, which determines their risk and returns. When many investors invest in a fund together, the fund is divided into equal parts called unit.

For example, suppose some friends want to buy a piece of land together. The price of a piece of land of hundred square yards is one lakh rupees. Now if you divide this fund into units of ten rupees then 10,000 units will be formed. Investors can buy as many units as they wish, according to their investment capacity. If you have only one thousand rupees for investment then you can buy a hundred units. In the same proportion, you too became the owner of that investment (land).

Now suppose that the value of this one lakh investment has increased to one hundred and twenty thousand after one month. Now, according to this investment, the unit price will be calculated, then the unit of ten rupees has now become twelve rupees. The investor who bought a hundred units in one thousand rupees, according to the twelve rupees per unit, now his investment (100×12) has been Rs. 1200.

Based on the amount invested by you as an investor, how many units you own. Therefore, an investor can also be known as a unitholder.

With this, you can see that an investor who can not make big investments, has the facility of investing in small units. Apart from this, the biggest benefit of Mutual Fund MF is that an investor who does not have much information about the market leaves his investment in the hands of experts. These experts determine where, how and when to invest.

Mutual funds can be invested in many ways. To know more read here

Also, It is very important for you to understand what is NAV if you want to invest in a Mutual Fund

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NAV in Mutual Funds and Explanation

It is very important for you to understand what is NAV if you want to invest in a Mutual Fund.

By investing in Mutual Fund Mutual Fund, your investment is in the hands of experts and in this way you can reduce the risk of direct investment in the stock market. Today, we will learn here that what is the NAV in the MF, how it is counted and how important it is.

Net Asset Value, or NAV, means directly the value of the total property. Net asset value, or NAV, in any of the Mutual Fund funds, after deducting the liabilities from the total value of all the shares of the portfolio, including cash, the outstanding balance is obtained by dividing it by the total number of units remaining.

NAV fund is per unit’s total asset value (excluding expenditure) and at the end of each day’s business, it is calculated by the asset management company (AMC) of that fund. On any given day, if that MF is terminated, then the unit holder of that mutual fund will get the price for each unit instead. In a way, the NAV is the book value of any mutual fund unit.

Most of the unit’s base value in the Mutual Fund Mutual Fund is Rs 10 or 100 rupees. In each business day, the NAV curve of the unit increases according to the market value of the fund’s portfolio.

NAV refers to the growth of the unit of a mutual fund mutual fund. If you invest Rs 12 per unit in a fund at NAV and after one year, if the NAV of that unit goes up to 15 rupees per unit then that fund has 25% growth. It is not right to believe that the mutual fund with lower NAV will give good returns and more NAV fund will give fewer returns.

Types of Mutual Funds read here.

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Different Types of Mutual Funds in India

Today we are going to discuss the different type of Mutual Funds,

MFs are categorized on the basis of which type segment we invest, like Equity mutual fund, Debt mutual fund and Hybrid mutual fund.

Equity Mutual Funds

As per name Equity Mutual Funds are those funds which are invested in the stock market, It is also divided into

Large Cap Fund

Mid Cap Fund

Small Cap Fun

Sector Fund

Diversified Equity Fund

Dividend Yield Fund

ELSS

Thematic Fund

Two Different Mutual Fund Structures

More than above Mutual Fund schemes have different style investment options, which are

Open Ended Fund:- A user can invest or withdraw units anytime that’s the advantage.

Interval Fund:-

Close Ended Fund:- After first investment time, it has a maturity period, in between this period no one can invest or withdraw the funds.

There are International Fund, Real Estate Funds, Gold Funds, Exchange Traded Fund categories as well for MFs.

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What are the best ways to find best mutual funds for beginners

Usually, people find best mutual funds schemes by looking into star ratings through websites like moneycontrol or valueresearchonline. Or sometimes we look into rankings of the best fund schemes which has given best returns in the previous 3 to 4 years.

But such cases for highly rated fund scheme managers need to be more responsible for such huge investments from customers and this leads him to compromise on the stocks he selects in the future.

So it is not predictable that the schemes which have the good track record till date will perform better in the future.

To pick the best mutual fund schemes go through these points mentioned below,

  1. The fund which has the best track record on the basis of consistency, with which safe track record rather than risky.
  2. Check for the fund manager previous track records also check if the fund manager changed for a particular mutual fund scheme. If a fund manager handles 5 funds and he is managing 3 or 4 funds better out of 5, then we can consider him he is good at managing fund schemes.
  3. Best return without risk track records are important.
  4. Large caps with a big percentage of return is more important than mid-cap/small-cap fund with a small percentage of returns.

 

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Trump’s Tax Cut Impact on Global Market

How it’s going to affect global market,  The U.S senate passed tax cut and job act plan by Trump. Which means the corporate tax reduced from 35% to 20%.  This will help the wealthy.

US Tax cut

By the way last day didn’t took this news seriously by the market. But it will help the US companies and the dollars. Whether it will help the bull market? it may or it may not. The US market can become beneficial by getting more investment.

Everyone hope this won’t affect other markets like India badly. Depends upon the reach of this act inside global market.

Wait and see.

 

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What Should I Do With My PF Account?

It is always a confusion for peoples that what I need to do with my PF account, if in a career gap or jobless situation.

Employee Provident Fund is one of the great investment methods to save a little money per month, it also gives 8-9% interest annually. One important thing is that these earnings are tax-free if you are not withdrawing the money before 5-year completion.


Benefits of Keeping EPF

  • EPF considered as Retirement benefit money, so it is always better to continue until you are employed
  • It is Tax-free if you are not taking PF amount within the 5-year timeline
  • switching PF account from one company to new company is an easy process

PF Amount withdrawal

You can withdraw your PF amount if you unemployed for 60 days after the last job. UAN is a mandatory number which will be provided by your previous employer. Before withdrawing your PF you need to make sure that whether you completed 5 years with your PF account or not because if the PF is active less than 5 years, then there will be tax while withdrawing the money. You need to update KYC which is mandatory nowadays, Also you need to verify the bank account, Adhaar card as well as the PAN(PAN needs to be updated to avoid 35% tax for the PF balance 50000 INR and above) card before claiming the amount.

Refer these videos to know how to check your PF balance and withdraw your PF,

 

 

 

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GST: The Goods and Services Tax

GST is implemented in India from July 1st, 2017. What is GST? How it is different from previous tax structure. Consider this business structure, Buying Raw Materials

Manufacturing  -> Sell To Warehouse or Wholesaler -> Sale To Retailer -> Final Sale To Consumer ->


For example, A shoe manufacturer need leather and plastics after production he sells to the wholesale team, Hence they will add labels with additional value to the products. After this, The retailer buys this product and after separate packaging process, they will increase the value to the shoes.

But GST will be levied on all transactions happening during the entire manufacturing chain. That means instead of the excise duty, State wise VAT and the point of sale VAT there is only GST.

The shopkeeper has paid a tax when he bought the item from the wholesaler. To recover that amount, he passes the liability to the customer. GST means the final liability on the end consumer is decreased.

Graphical Explanation


There 3 Kind of GST

CGST: where the revenue will be collected by the central government.

SGST: where the revenue will be collected by the state governments for intra-state sales

IGST: where the revenue will be collected by the central government for inter-state sales


Goods and Service Tax (GST) as the name suggest is one single tax on the supply of goods and services, right from the Manufacturing to the ultimate delivery to a customer.

ie, The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

 

GST Simple Explanation | Hindi

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