All you want to know about investing in mutual funds

Announcing “Unovest”

October 23, 2015 by Vipin Khandelwal

In my past interactions with you and based on the other feedback that I have received, one issue that has stood out is about investing in direct plans of mutual funds.

It is just not easy today.

What are your options?

Your regular distributors, including the online ones, do not offer direct plans. That is not their business model. This is thus not an option.
The registrars including CAMS and Karvy have a limited online facility to invest. The myCAMS solution from CAMS is great but then is limited to lump-sum and switch transactions as of now, not SIPs. Not to mention, you can deal with only the 15 Mutual Funds. What about the others? The solution from Karvy, which is another registrar like CAMS, is nothing to write about.
The next option is that you invest with mutual funds directly. This is super cumbersome. You have to go to each fund house’s website that you want to invest with, create a login id and password and then go through the process of investing. The result is multiple login ids and passwords and no central tracking or monitoring of your portfolio.

The curious case of Index Funds

January 30, 2017October 10, 2015 by Vipin Khandelwal

No one wants to buy index funds

The concept of Index funds has not worked in India, at least not so far. They are super hit in countries like the USA but not in India. Vanguard in the USA, the largest mutual fund company, has all its products as index funds.

Further read: Founder of Vanguard, John Bogle’s 8 Rules to build your mutual fund portfolio

Less than 1% of the overall investments in equity mutual funds in India are in index funds. That says it all.

The one word that would come to anybody’s mind who is picking mutual funds is ‘performance‘, which again, for index funds, is nothing to write home about.

There are several ‘other funds‘ that have delivered much better returns. And is that not what we want – more returns?

The ‘other funds‘ are the ‘actively managed‘ funds compared to the ‘passively managed‘ index funds.

Having said that, there are some key benefits of using index funds as a part of a long-term portfolio. Let’s explore them here.

Mutual fund – Even Baba Sehgal has it!

October 3, 2015 by Vipin Khandelwal

What’s the connection between Baba Sehgal and mutual funds?

Well, he has done something that probably no one has ever done before.

No one will be able to convince you better than Baba Sehgal as to why you need a mutual fund.

He has made a hilarious rap video on mutual funds.

It will not only make you laugh and wonder but also ensure that you have mutual fund on your mind.

Absolutely must watch!

Balanced Mutual Funds: Balancing the upside and the downside

May 13, 2016October 1, 2015 by Vipin Khandelwal

The doorbell rang, twice. I open the door and I see Sachin, my neighbour, standing there. He stared at me and then quickly walked into my house.

“Vipin, I read your posts on equity mutual funds and debt mutual funds. I also read about asset allocation and diversification.” Sachin said, as he took a seat.

“But you know, I still can’t figure out how to build my portfolio of debt and equity funds. It is all getting too confusing – choosing equity funds, then debt funds.

Can you tell me just ONE fund that can take care of both debt and equity investment?” I now understood the purpose of the sudden visit.

“Ah, my friend, I understand your pain. I guess even the mutual fund houses understand it too. So, they made something to solve exactly your problem.” I replied.

“You mean to say something like that actually exists. That’s great! What is it?”

Save taxes with mutual funds: ELSS

September 26, 2015September 25, 2015 by Vipin Khandelwal

“Save taxes with mutual funds?”, my friend Ajay had a look of curiosity on his face as he heard this. “How is it possible?”

“Yes, it is. There are mutual fund schemes specifically created for this purpose. They are known as Equity Linked Savings Schemes or ELSS or Tax saving mutual funds.

I am sure you are aware that under Section 80C of the Income Tax Act, you can invest upto Rs. 1.5 lacs in various eligible investment options and claim deduction of income tax. Simply put, when you invest in those specified options you do not have to pay any tax on that portion of the income.

ELSS funds are eligible for such investment.” I took a pause.

“So these ELSS funds invest in stocks?” Ajay was excited.

“Yes, these funds invest most of their monies in stocks.”

Ajay looked happy. “Isn’t that a wonderful combination – save taxes as well as get benefit of equity investing?”

I nodded in agreement and said, “The popular idiom to describe such a benefit is to kill two birds with one stone. In Hindi, that would be ek teer se do shikaar.”

“Are there any restrictions that apply to this investment?” he enquired further.

Equity Mutual Funds: Avoid these!

September 25, 2015September 23, 2015 by Vipin Khandelwal

Talk to any wise person and one learning that you are most likely to take away is that you should tread your path carefully.

And if you hear Charlie Munger, Warren Buffett’s best buddy and partner in Berkshire Hathaway; he puts it like this.

AVOID BIG MISTAKES.

Quite simple.

When it comes to investing, the rule stays the same.

When you are out there to build your portfolio of equity mutual funds, you may not be very lucky all the time to find the best performing funds. But what you can and should is that when you set out to pick your funds, ensure that you avoid the big mistakes.

How do you avoid the big mistakes?

Usually, investors select funds that have delivered the highest returns in the past. That’s the easy bait. But that also akin to entering DANGER ZONE, a sure-shot recipe for disaster.

The only point that should be noted in this regard is: