At TVM Wealth , our Expert Analysts do extensive research to provide you the best so that it becomes easier to choose a scheme that fulfills your need and goals. We offer:
DEFINITION OF A MUTUAL FUND
A mutual fund is like a trust that pools money from different investors who share a mutual investment objective. This trust is managed by a professional fund manager. The manager uses these funds to invest in equities, stocks, and different money market instruments which help increase wealth. The income gained from this collective investment is then distributed amongst all the investors proportionately after deducting certain expenses.
Imagine there is a box of 12 oranges which cost Rs.40. There are 4 friends, who want to buy this box but have only Rs.10 each. They decide to pool in their money and buy the box. Based on each of their contributions, they are entitled to get 3 oranges. Now try equating this example with mutual funds. The cost per unit is calculated simply by dividing the total amount of investment by the total number of shares/equities. Every investor is a part-owner of the fund and collectively they own the entire pool of money.
Net Asset Value (NAV) is the price of the mutual fund which is essentially the combined market value of the securities, shares, and bonds held by a fund, after deducting all the expenses and charges. If you combine the market value of all the shares and securities in the fund and divide it by the total number of units from the fund, you'll arrive at the NAV per unit.
Features of Mutual Funds
In general, a mutual fund invests in big amounts buying and selling different asset classes enabling investors to benefit from reduced trading expenses. Through a Systematic Investment Plan, investors can be exposed to such portfolios with an investment as modest as Rs.500/-* in mutual funds. Such a portfolio would otherwise be highly costly for an investor directly investing in the stock market to buy and retain.
*Subject to the Asset Management Company (AMC) requirements.
Rupee-cost Averaging
Investment in Mutual Funds through SIP offers the investor with a disciplined strategy to regularly invest certain amounts regardless of the investment's unit cost. Therefore, when the price is low the money invested gets more units and lesser units when the price is high. Thus, a reduced average price per unit can be achieved over time. The Rupee cost averaging enables to smooth out long-term market ups and downs while decreasing the risk of investing in unstable markets.
Choice of Investment
Mutual Funds are the only category of products that meets the needs of every individual. You will always discover a mutual fund that suits your time horizon–lengthy, medium, or short; and small, medium, high risk-taking capacity. All this irrelevant to how much you're investing, whether it's a very tiny investment or an enormous Lump sum. Your advisor will keep your profile in mind to assist you in choosing the correct fund(s).
Minimizing Costs
Mutual funds assist investors profit from economies of scale by pooling cash from large numbers of individuals with a common interest and investing their cash in the appropriate asset class/classes. This enables investors to share their money's management costs.