JavaTechies / Personal Finance

Myth & Fact all about Mutual Fund Myth : Mutual funds are stock market investments  Fact : Mutual funds are diversified investments that invest across stocks, bonds, money market instruments and combination of these. Mutual  Myth: One can only invest large sum in mutual funds  Fact : An investor can start mutual fund investment via Systematic Investment Plan (SIP) mode and invest regularly with amount as small as ` 1000. Myth: SIP gives positive returns  Fact: Mutual fund SIPs are subject to market risks and there are no guaranteed returns in these tools Myth: SIPs are beneficial for short-term  Fact: There are different mutual fund options for short-term and long-term goals. SIPs have historically given better returns when invested for long-term. Myth : Net Asset Value (NAV) is the performance indicator of a mutual fund.  Fact : NAV is only the price per unit of your invested fund. The decision to select a mutual fund sho...

Equities over medium to long term is a wealth creating asset. However, it is the nature of the equities to move up and down over the short-term. Trying to time the market over the short-term is extremely challenging. One solution is to maintain a long-term horizon and ignore the short-term fluctuations. On the other hand, SIP (Systematic Investment Plan) helps take advantage of ups & downs in market and mitigate risk arising from market volatility, provided the SIP is continued over long periods of time. There are abundant stories highlighting the importance of long term investing and the importance of averaging through SIP investing. But, nothing can tell it better than the numbers do. Consider this, SIP of Rs 3000 per month in HDFC Top 200 Fund since inception (Oct 11, 1996) has created wealth to the tune of Rs ~82 lakhs as on Dec 30, 2016, despite the fact that the journey was bestrew with many global/local events like tech bubble, Asian crisis, Pokhran blast, Lehman crisis...