Mutual Funds

 KYC (Know Your Customer) documentation is a mandatory process for investors in mutual funds to ensure compliance with regulatory requirements and to verify the identity of investors. Here are the typical documents required for KYC in mutual funds: 1. Proof of Identity (PoI) Acceptable documents include: PAN Card (mandatory) Aadhaar Card Passport Voter ID Card Driving License Any other document specified by the relevant authority 2. Proof of Address (PoA) Acceptable documents include: Aadhaar Card Passport Voter ID Card Driving License Utility Bills (Electricity, Water, Gas) not older than 3 months Bank account statement/passbook (not older than 3 months) Ration Card Rent Agreement Any other document specified by the relevant authority 3. Photograph Recent passport-sized photograph 4. In-Person Verification (IPV) Some institutions may require in-person verification, where the investor needs to visit the institution's office or have a representative visit the investor for document v...

 Active and passive investing represent two distinct approaches to managing investments, each with its own set of advantages and disadvantages: Active Investing: Advantages: Potential for Higher Returns: Active managers aim to outperform the market, so there's a chance for higher returns if successful. Flexibility: Managers can react to market conditions, economic trends, and company-specific events by adjusting their portfolios. Customization: Investors can tailor their portfolios to specific goals, risk tolerances, or ethical considerations more easily. Disadvantages: Higher Costs: Active management typically involves higher fees and expenses compared to passive funds. Potential for Underperformance: Many active managers fail to beat the market consistently over the long term, leading to lower returns than a passive strategy. Time and Effort: Requires continuous research, monitoring, and decision-making, which can be time-consuming and stressful. Passive Investing: Advantag...

 Insurance and Investment are different products. Insurance is taken against protection. It will protect us in unforeseen conditions. If something happens to the main earning member in the family, then insurance claim will protect that family. The returns are nominal. It is less than FD. The best way to take insurance is Term Insurance. With very less premium, the nominee of the policy holder will get huge amount in his absence. This will help the family to lead a normal life as usual without struggling for money.

PPF - Public Provident Fund. PPF allows you to invest for 15 years and cannot be withdrawn. It can be extended for every 5 years there after. The rate of interest at present is 7.1% per annum. Though it is useful to save tax under section 80C, it can only beat inflation. Wealth Generation is not possible through PPF. . Minimum 1 instalment of Rs.500 should be deposited per annum. Maximum limit to invest is Rs.1,50,000 per annum. After 7 years, we can withdraw our investments but a charge is levied on our withdrawal amount. By investing through SIP in ELSS (Equity Linked Savings Scheme), we can generate wealth exponentially over a period of time. The lock in period is just 3 years as compared to 15 years in PPF. After three years we can with draw the amount without any charges. SIP can be paused any time if required, till we decide to continue again. That will not cause any issue to the invested amount. There is no upper limit for our investments. Though there is a risk of market...

Starting SIP (Systematic Investment Plan) early offers several advantages: Compounding Benefits : SIP allows you to benefit from the power of compounding. When you start early, your investments have more time to grow exponentially because returns on your investments themselves earn returns over time. Longer Investment Horizon : Starting early gives you a longer time horizon, which means you can afford to take more risks and invest in assets with higher potential returns, such as equities. This can potentially lead to higher overall returns compared to starting later. Rupee Cost Averaging : SIP involves investing a fixed amount regularly, regardless of market conditions. This strategy allows you to buy more units when prices are low and fewer units when prices are high. Over time, this can result in a lower average cost per unit of investment. Discipline and Regular Savings : SIP instills financial discipline as it requires regular investing. Starting early helps inculcate a savings hab...

 The good time to start investment is the movement you have cash on hand. There is no good time better than that. Before investing one should think about the duration of how long to stay invested. It is not at all important when to start. We should only focus on our goals while investing. Please refer below the Nifty chart since its inception. Not only COVID,, but there are many obstacles in Nifty including Kargil war, Lehman Brothers Crisis , Government instability and so on. Every time there is an obstacle, Nifty corrected upto 40% or more. Inspite of all such corrections, still nifty managed to move from 1000 points in 1996 to 23500 points in 2024 with a CAGR of 18%. Every time there is a correction, Nifty managed to bounce back exponentially. No one predicted COVID, Kargil war, Lehman Brothers Issue or some other issues that we saw. Everything came and went. No one is discussing them today. We will see much more obstacles in coming days. None of us can predict them. Instead of ...

Below is the chart that shows how ₹1000 in each of these funds grew over a period of 20 years from 2003 to 2023. From the chart it was noticed that Small cap and Mid cap returns are more than Large cap. During corrections, large cap will correct upto 20%. Midcaps can fall from 30–40% and Small cap may lose the value from 40–60%. If we invest only in Small Caps by looking at past performance, we may get panic and try to withdraw the entire portfolio during corrections. Investment in large cap alone will not give desired returns. It is also advised to invest some portion in Debt funds also. This will help in generating emergency fund so that we can withdraw if required with out disturbing the equity part. So invest 40% in Large cap, 30% in Midcaps, 20% in small cap and 10% in debt funds for better returns.  

 SIP is Systamatic Investment Plan. We can start SIP with as low as Rs.500 every month. For small investors who want to invest in stock market can go through SIP.  When markets fall, we will get more units and when markets raise, our investments grow faster. On the other hand, Lumpsum amount is invested only once. Even when market falls, we may not have sufficient funds to add. More over, many people can’t afford to pay Lumpsum at a time. So investing in Mutual funds via SIP mode is easy.

 Before investing in Bitcoins, we need to search answers for below questions. Who regulates Bit coins? In India, RBI regulates and governs all financial activities. Then why are they not involving in Bitcoins? RBI clarified that they are not going to permit in trading Bitcoins and if any one interested to do so, can do at his own risk. If you can find answers for these questions, you can invest in Bitcoins. On the other hand, Mutual Funds are regulated by SEBI.  All Mutual Fund Houses should follow the guidelines of AMFI under the purview of SEBI. AMFI - Association of Mutual Funds in India. SEBI - Securities and Exchange Board of India.

 It depends on the age and requirement of the investor. One should have a goal based investment approach. Dream of Own House, Self retirement and Kids education, marriage are primary goals for most of us. So, we can continue SIPs till we achieve those goals.

We can park the corpus in Debt Mutual Funds or in Liquid Mutual Funds and systematically withdraw at regular intervals. This process is known as Systamatic Withdrawal Plan (SWP). This is useful for a person who is retired and need money for his daily needs.  He can fix a day to withdraw a portion of the corpus.  Every month the said amount will be credited to his bank account on that particular day. In the past, debt mutual Funds gave a return of 8% to 10% where as Liquid mutual Funds gave a return of 5% to 6%.

Returns are purely dependent on markets for all Equity Mutual Funds.  We can expect good returns in longer period.  Goal based investments are more profitable if invested for 10 years / 15 years / 20 years and so on. Long term investments are suitable in below situations: 1. A person aged 30 years has 30 years for retirement.  So if he starts at the age of 30 years and start SIP for next 30 years, he can accumulate good wealth. 2 . Young couple with new born kids.  They can start investment for next 20 years.  After the kids grown up, the accumulated fund can be used for their kids higher education or marriage. Every one will face above situations in their life.  So planning early will give good returns. In the past 20 years, Equity Mutual Funds gave Compounded CAGR return of more than 15% annually .  We can expect this return in next 20 years also if we continue investing.