Archive for May, 2009

How to choose a Mutual Fund?

mutual funds
mutual funds

Mutual funds are the best investment tool for the retail investor as it offers the twin benefits of good returns and safety as compared with other avenues such as bank deposits or stock investing.

Choose the wrong fund and you would have been better off keeping money in a bank fixed deposit. Keep in mind the points listed below and you could at least marginalise your investment risk:

1) Past performance –

While past performance is not an indicator of the future it does throw some light on the investment philosophies of the fund, how it has performed in the past and the kind of returns it is offering to the investor over a period of time.

Also check out the two-year and one-year returns for consistency.

How did these funds perform in the bull and bear markets of the immediate past?

Tracking the performance in the bear market is particularly important because the true test of a portfolio is often revealed in how little it falls in a bad market.

2) Know your fund manager

The success of a fund to a great extent depends on the fund manager.

The same fund managers manage most successful funds. Ask before investing, has the fund manager or strategy changed recently?

For instance, the portfolio manager who generated the fund’s successful performance may no longer be managing the fund.

3) Does it suit your risk profile?

Certain sector-specific schemes come with a high-risk high-return tag. Such plans are suspect to crashes in case the industry loses the marketmen’s fancy.

If the investor is totally risk averse he can opt for pure debt schemes with little or no risk. Most prefer the balanced schemes which invest in the equity and debt markets. Growth and pure equity plans give greater returns than pure debt plans but their risk is higher.

4) Read the prospectus

The prospectus says a lot about the fund. A reading of the fund’s prospectus is a must to learn about its investment strategy and the risk that it will expose you to.
Funds with higher rates of return may take risks that are beyond your comfort level and are inconsistent with your financial goals.

But remember that all funds carry some level of risk. Just because a fund invests in does not mean it does not have significant risk.

Thinking about your long-term investment strategies and tolerance for risk can help you decide what type of fund is
best suited for you.

5) How will the fund affect the diversification of your portfolio?

When choosing a mutual fund, you should consider how your interest in that fund affects the overall diversification of your investment portfolio. Maintaining a diversified and balanced portfolio is key to maintaining an acceptable level of risk.

6) What it costs you?

A fund with high costs must perform better than a low-cost fund to generate the same returns for you.

Even small differences in fees can translate into large differences in returns over time.

Finally, don’t pick a fund simply because it has shown a spurt in value in the current rally.

Ferret out information of a fund for atleast three years. The one thing to remember while investing in equity funds
is that it makes no sense to get in and out of a fund with each turn of the market.

Like stocks, the right equity mutual fund will pay off big — if you have the patience.Similarly, it makes little sense to hold on to a fund that lags behind the total market year after year.

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“SMC Diksha”

Q. What is saving?

In common usage, saving generally means putting money aside. For example, by way of putting money in the bank or investing in some avenue. Thus it is that part of the disposable income which is not spent on current consumption; i.e disposable income less consumption.

Q. Why does one save at all?

One need to save because when he does so he is putting something of his into something else in order to achieve something greater. In simple words he needs to save because the money he saves  can be used for investment. When one invest his/her savings in a stock, bond, mutual fund or real estate he/she does so because he/she thinks its value will appreciate over time.

Q. What is an Investment?

Investing money is putting that money into some form of “security” – an oft quoted word for anything that is “secured” by some assets.  Stocks, bonds, mutual funds, certificates of deposit – all of these are types of securities.  As with anything else, there are many different approaches to investing.

For the purposes of this explanation, there are three basic styles of investing: conservative, moderate, and aggressive.

In brief, a conservative investor wants to protect principal and earn income; a moderate investor is willing to take a certain amount of risk to achieve some stock price appreciation as well as current income; and an aggressive investor is primarily concerned with high overall returns even though it means taking more risk.

Q. What are the different modes of Investment?

There are three basic types of investments, also known as asset classes, all of which we are going to discuss. These investments are stocks, bonds and cash.

You can buy stocks and bonds as individual investments, or you can invest in them by buying mutual funds that own stocks, bonds or a combination of the two.

If you invest in cash, you can put money into bank accounts and money market mutual funds or you can buy what are known as cash equivalents:  Treasury bills, Certificates of Deposit and similar investments.

While you may not think of bank accounts as investments because they currently pay an abysmally low rate of interest.

On the other hand, stocks and stock mutual funds have been the most profitable investments over time.

Mutual Fund Basics

What is a Mutual Fund?

A mutual fund is an investment that pools money from many investors, and that money is used to invest in stocks, bonds and other securities. One mutual fund share includes a portion of a share of each stock held in the fund’s portfolio.

Who Decides What a Mutual Fund Invests In?

Mutual fund managers decide what securities to buy or sell guided by the mutual fund’s objectives. If a mutual fund’s objective is to invest in the energy sector, the manager cannot buy shares in technology stocks. Fund objectives let you know what to expect now and in the future.

Who Decides What a Mutual Fund Invests In?

Mutual fund managers decide what securities to buy or sell guided by the mutual fund’s objectives. If a mutual fund’s objective is to invest in the energy sector, the manager cannot buy shares in technology stocks. Fund objectives let you know what to expect now and in the future.

SMC Global

SMC Group, a leading Financial services provider in India is a vertically integrated investment solutions company, with a pan-india presence.

Currently, SMC has a highly efficient workforce of over 4,000 employees & one of the largest retail network in India currently serving the financial needs of more than 5,50,000 satisfied investors.

Over the Years, SMC has expanded its domestic & international operations. Existing network includes regional offices at Mumbai, Kolkata, Chennai, Bangalore, Cochin, Ahmedabad, Jaipur, Hyderabad and 1500+ offices across over 350 cities in India. SMC has plans to grow its network to 2,000 offices across 500+ cities in the next 3 years. The company has expanded internationally, and has established office in Dubai Gold and Commodities Exchange (DGCX).

Its products and Services include Institutional and retail brokerage of equity, commodity, currency,derivatives,online trading , investment banking, depository services, clearing services, IPOs and mutual funds distribution, Portfolio management, wealth advisory, insurance broking, equity and commodity research.

Welcome to the SMC Global Family :)

SMC Global Securities

SMC Global Securities

If you find yourself asking the question –

Why should I Save ?
Why should I Invest ?
Where do I Invest ?
Who would Guide me to take informed decision on my Investments ?

…then look no further !

SMC Global Securities, a leading Financial services provider in India, a vertically integrated investment solutions company, with a pan-india presence is there to guide you and provide complete investment solutions to you.

Currently, SMC has a highly efficient workforce of over 4,000 employees & one of the largest retail network in India currently serving the financial needs of more than 5,50,000 satisfied investors.

Memberships and Registrations

• Member of NSE, BSE, F&O, NCDEX, MCX & DGCX

• Clearing Member in NSE F&O, BSE F&O and DGCX

• Depository Participant for both shares & Commodities

• Category 1 SEBI approved Merchant Banker

• Insurance Broker (Life & Non-Life)

• Distributors of IPOs, Mutual Funds

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