Frequently Asked Questions
General Questions
AMC is a professional money manager and has mutual fund schemes with different investment objectives. They hire professional fund managers who are responsible for buying and selling securities (debt + equity) in sync with the investment objective of the fund.
In proportion of the amount invested and Net Asset Value (NAV), units of mutual fund scheme are allocated to the investor. Capital appreciation & income earned is shared between investors in proportion to their unit holdings.
‘Mutual funds’ too have created this kind of perception that mutual funds invest only in stocks and hence are risky. In reality, there are different types of nutual funds which are meant for meeting different investment needs. Some individuals look for only high returns which only investments in stocks fulfill. These investors buy equity mutual funds which are one of the best long-term investment options available for achieving the objective of high growth. But these equity mutual munds inherently have risk of higher volatility due to exposure to stocks of various companies.
The other mutual funds invest in bonds issued by banks, central and state governments or companies, and money market instruments like banks CDs, treasury bills, commercial papers etc. which are less risky than equity but also give lower returns than equity. But they provide higher returns than bank FDs and PPFs. Hence, debt mutual funds provide a great way for you to achieve your goals as they are more tax efficient and provide higher returns than traditional FDs and PPFs.
Whereas in Portfolio management schemes (PMS) investors individual investment can be identified and each investor has a separate profit and loss..
Returns on FDs are taxed as per the income bracket of the individual.
Where as in mutual funds, money is invested as per the scheme’s investment objective. The profit/ loss are variable and the same is distributed to investors based on the proportion of their unit holdings.
Mutual funds are taxed based on the asset class the funds are invested in.
Apart from this, the board of directors of an AMC also takes care of the interests of the investors.
2. Economies of scale: - Mutual funds buy and sell large amounts of securities at a time, this helps reduce transaction costs and brings down the average cost of the unit for investors.
3. Professional management: - Mutual funds are managed by thorough professionals. Most investors either don’t have the time or the expertise to manage their own portfolio. Hence, mutual funds are a relatively less expensive way to invest and monitor their investments.
4. Liquidity: Investors always have the choice to easily liquidate their holdings as and when they want.
5. Simplicity: Investing in a mutual fund is considered to be easier as compared to other available instruments in the market. The minimum investment is also extremely small, where a SIP can be initiated at just Rs.500 per month basis.
You should always look to minimize your risk by distributing your investments among various financial instruments, asset classes, industries and other categories. The intent is to maximize the return on investment by being invested in different areas which are unrelated to each other. This also gives you a buffer to reduce the impact of market downturns.
When you purchase a unit of a mutual fund, the purchasing price is the NAV. Unlike share price which changes in real time, the NAV is updated at the end of each trading day. Due to this, the investor never knows the exact NAV at the time of buying and selling.
The NAV is calculated as net assets minus net liabilities (expenses) of the mutual fund scheme on a given day & dividing it by the number of outstanding units.
You can also sell close ended funds in the secondary market but this is difficult. Firstly you have to go through a broker and you would have to sell your funds at a discount to the price they are traded at.
At EzeeHouse we have handpicked the best mutual funds for tax exemption 2018 to save you taxes up to Rs 1.5 lakh under Section 80C.
Based on research by our experts, we recommend the following best tax saving mutual funds (ELSS funds) to invest online.
Best Mutual Funds for Tax Exemption 2018
Principal Tax Savings
ABSL Tax Relief 96 (G)
DSP BR Tax Saver Fund
Kotak Tax Saver – Regular (G)
But if you really wish to see some significant change in your investment then invest for long time.
Visit the website of SBI mutual fund , then register and invest .
Through the companies like Ezeehouse , Scripbox etc . Visit there site and through a simple procedure you can invest and track your mutual funds .
Best mutual funds to invest online | Best mutual funds to invest online
Ezeehouse answers how to invest in mutual funds
Finance Blog | Scripbox.com
Mutual Fund FAQs.
Apart from this, the board of directors of an AMC also takes care of the interests of the investors.
For more details about Mutual funds,click on the link below.
Ezeehouse answers how to invest in mutual funds
You can get profit only when you sell or redeem your investment.
I would suggest that you should try and mitigate your risk by investing through
- A STP or SIP route
- Don’t put all your funds in small and mid caps like you can put 25 percent of your portfolio in small and mid caps and gradually move it 40% to 50?ter you see a fall in volatility.
Starting a SIP is good investment idea.
But we would suggest you diversify (don't put all your eggs in one basket) your investments into different funds houses and different types of funds to get the highest risk adjusted returns.
You can visit our investment app ezeehouse to get a good diversified portfolio or Visit — https://www.ezeehouse.com
Mutual funds are optimal investment drive for those common investors who are unaware of how to invest in mutual funds online. It is one of the simplest form to widen their venture.
Common investors can appoint mutual fund expert. We at Ezeehouse Services have short listed the best mutual funds in india & recommend investors about best mutual fund to buy. If you are investing through us, Sign-up with us, Complete your KYC and you are good to go.
Mutual funds are professionally managed and well diversified to offset potential losses. They offer an attractive way for savings with low fees or requiring constant attention from individual investors. Mutual funds investments are for investors who lack time or knowledge to make difficult investment decisions. In a mutual fund, the portfolio manager makes these essential decisions for you.
Start your mutual funds investments online by downloading the Ezeehouse App from Google Play Store
4 REASONS TO BUY MUTUAL FUNDS ONLINE AND SAY “MUTUAL FUNDS SAHI HAI”
Does the word “investments” scare you and raise a number of questions like where should you invest your money – should you buy mutual funds online, invest in real estate, invest in stocks, etc? How much amount should you invest, are your investment safe, will you get the desired returns on your investment etc.?
Besides this you would have heard and believed in a lot of myths and misconceptions that have also clouded your judgement.
But remember mutual funds are the solution to all your investment problems.
Mutual funds are a safe and simple way to put your money to work. You have to choose the mutual funds based on your requirements. Invest in the best mutual funds online or through paperwork and you are good to go.
Now let’s look at the top 4 reasons why you should buy mutual funds online?
- No lock in-period, withdraw your funds anytime
- Balance between risk and returns.
- You can invest for short-term or long-term goals
- Buy mutual funds online with an amount as low as Rs 500!
In mutual fund investments, investor funds are collected and pooled together to form a common investible fund. All the investors have same profit and loss. Investors cannot see individual investments made by fund managers.
Whereas in Portfolio management schemes (PMS) investors individual investment can be identified and each investor has a separate profit and loss.
Another major difference in mutual fund and PMS is investment amount. In PMS you must have minimum 25 lakhs to invest but in mutual funds you can start with minimum 500 rupees.
Invest for long term – an advice routinely given by many Mutual Fund distributors and investment advisors. This is especially true in case of certain Mutual Funds – such as equity and balanced funds.
Let us understand why the professionals give such advice. What really happens in the long term? Is there a benefit of staying invested for long term?
Consider your Mutual Fund investment as a good quality batsman. Every good quality batsman has a certain style of batting. However, each good quality batsman would be able to accumulate lots of runs, if he continues to play for years.
We are talking about the record of a “good quality” batsman. Every good batsman would go through some good and poor performances. On average the record would be impressive.
Similarly, a good Mutual Fund would also go through some ups and downs – often due to factors beyond the control of the fund manager. An investor would benefit if one stays invested through these funds for long periods of time.
So, as long as you can afford, stay invested for long periods of time – especially in equity and balanced funds.
Basics of Mutual Funds
Mutual funds are professionally managed and well diversified to offset potential losses. They offer an attractive way for savings with low fees or requiring constant attention from individual investors. Mutual funds investments are for investors who lack time or knowledge to make difficult investment decisions. In a mutual fund, the portfolio manager makes these essential decisions for you.
The trustees have superintendence power and direction over the AMC. They also track mutual fund performance and compliance of SEBI regulations.
Investors are given units of the mutual funds based on the price and funds they have invested. The Asset Management Company is responsible for managing the investments, advisory services, financial consulting, customer service, accounting, marketing and sales functions for the schemes of the mutual fund.
Professional Management
Mutual fund investments give investors access to professional management for their funds. Professional management has many advantages like a clear investment objective, investment based research and prudent investment processes etc.Affordable Portfolio Diversification
Diversification helps reduce the risk of a portfolio and hence gives better risk adjusted returns. With even small investments say - of Rs 500, gives investors ownership of a portion of a diversified investment portfolio.Economies of Scale
Investor’s together results in large sums of money which in turn gets investors access to professional managers to manage their funds which individual investors cannot do. Along with the higher transaction volume mutual fund investors get to negotiate better terms with brokers, bankers and other service providers. This is a distinct economic advantage to an investor in terms of cost saving.Liquidity
Investments like real estate, venture capital, PPF where the investor cannot easily sell his investment in the market or get immediate access to funds as per their needs, are technically called illiquid investments and may result in losses for the investor.Depending on the type of mutual fund, they can be liquidated, either at any time, or during specific intervals, or at times only on the closure of the scheme.
Tax Deferral
Mutual fund investors can let their investment grow in a scheme for several years and with this, they can defer their tax liability. This helps investors to legally build wealth faster than would have been the case, if you were to pay tax on the income each year.Tax benefits
Tax saving mutual funds (ELSS) give the benefit of deduction of the amount subscribed (up to Rs. 150,000), from the income that is liable to tax.Dividend received from mutual fund schemes is tax-free in the hands of investors. However, dividends from certain categories of schemes are subject to dividend distribution tax, which is paid by the scheme before the dividend is distributed to the investors.
Long term capital gains is 10% and short term capital gain is 15% and gives mutual funds a definite advantage over other asset classes like real estate, debt etc.
Investment Comfort
Investment in mutual funds can be made very easily and additional purchases need minimal paperwork. In today’s world mutual fund investments can be made completely online.Regulatory Comfort
Mutual funds are regulated by Securities & Exchange Board of India (SEBI). SEBI has mandated strict checks and balances in the structure of mutual funds and their activities.Systematic Approach to Investments
Mutual funds let investor invest regularly with a Systematic Investment Plan (SIP); or withdraw regularly with a Systematic Withdrawal Plan (SWP); or move money between two schemes with a Systematic Transfer Plan (STP). These approaches promote investment discipline and are extremely useful in long-term wealth creation and protection.Based on Subscription and Redemption
a) Open-ended Mutual Funds.Mutual funds which can be purchased and redeemed at all times are called open ended mutual fund. Investors can buy and sell units of these mutual funds at the NAV price, hence are very liquid.
b) Close-ended Mutual Funds
Mutual funds that can be bought for a specified period at the time of initial launch are called close ended mutual funds. These funds are listed on a recognized stock exchange and are sold on the secondary market and hence are not very liquid.
c) Interval Funds
Interval funds combine the features of open and close-ended funds. They trade on stock exchanges and can be sold at predetermined intervals on the prevailing NAV.
Based on Investment Objectives
a) Equity Funds
Equity funds invest primarily in stocks with the investment objective of long-term capital growth. Minimum 65% of its funds should be in equity and equity related securities. The mutual fund investments can be across a wide range of industries or focus on one or more industry sectors or based on market cap. Investors with a long-term outlook and higher risk appetite look for equity funds.
b) Debt/Income Funds
Debt / Income funds invest in securities such as bonds, corporate debentures, government securities (gilts) and money market instruments. At least 65% of its corpus has to be in fixed income securities. They provide low risk and stable income to investors with capital preservation. These mutual funds are less volatile and produce regular income. They are suitable for investors who are looking for capital safety and moderate growth.
c) Balanced Funds
Balanced funds invest in both equities and fixed income instruments in line with the pre-determined investment objective of the scheme. These funds provide both stability of returns and capital appreciation.
Liquid Funds
Liquid funds invest in instruments with very little risk like FDs such as Treasury Bills, Certificates of Deposit and Commercial Paper for a period of less than 91 days. These are ideally suited for investors looking to park their funds for short durations with minimal risk.
Gilt Funds
Gilt funds invest exclusively in government securities and only have interest rate risk. They have no or very little credit risk as they are backed by government.
Different types of Mutual Funds & what they typically invest in:
Type of Fund | Typical Investment |
Equity or Growth Fund | Equities like stocks |
Fixed Income Fund | Fixed income securities like government and corporate bonds |
Money Market Fund | Short-term fixed income securities like treasury bills |
Balanced Fund | A mix of equities and fixed income securities |
Sector-Specific Fund | Sectors like IT, Pharma, Auto etc. |
Index Fund | Equities or Fixed income securities chosen to replicate a specific Index for example S&P CNX Nifty. |
Fund of funds | Other mutual funds |
Liquid funds invest in instruments with very little risk like FDs such as Treasury Bills, Certificates of Deposit and Commercial Paper for a period of less than 91 days. These are ideally suited for investors looking to park their funds for short durations with minimal risk.
KYC Questions
Know your customer ('KYC') is the process mandated to ensure that customer of a financial services firm is real and his identity details, address, contact details and demographic information like age and place of birth is verified and collected as per standard format prescribed by SEBI Guidelines.
SEBI (Securities and Exchange Board of India) is the regulator for all investment activities in securities in India.
When you make a mutual fund investment, or open an investment account, the financial service providing firm which is a SEBI registered intermediary has to ensure that your KYC information is collected, verified and updated.
The Information is collected and stored in a standardized format. Once collected, your information is stored with national KRA (KYC Registration Agency). Once the information is stored with a KRA, you do not need to resubmit whenever you invest next time.
If your KYC status is registered, it means your information is stored and available with KRA and there is no need for you to submit your details again. However, if your KYC status is under process, on hold, incomplete, rejected, old or not available etc. you will have to again complete a fresh KYC process.
You need to submit a fresh application along with a self-attested photo. You also need to submit a copy for identity proof such as:-
a). Passport
b).Driving licence
c).Voters' identity card
d).PAN card
e). Aadhaar Card issued by UIDAI and NREGA Card for address proof
f).Latest bank statement
g).Voter identity card
h).Ration Card
i).Registered lease/sale agreement of residence
j).Latest landline telephone bill
k).Latest electricity bill
l).Gas bill
m).Aadhaar
Investment Basics
Power of Compounding
Compounding is a very powerful concept and you should ensure it works in your favour. You have to give it time to work as the interest you earn also earns interest and returns grow at a geometric rate. As a result you money keeps multiplying at a very fast rate.
It gives you the maximum benefit when you give it long time like 15 to 30 years.
15*15*15 Rule ?
It states that if you do a SIP of 15000 for 15 years and you get a return if 15% per annum your investment of 27 lakhs fetches you 1 Crore.
There is also a another rule 15*15*30 rule
Here you are investing for a period of 30 years and after 30 years you will have 10 cr in your kitty on an investment of only 54 lacs.