Use Direct investments – keep your costs low: A recent SEBI ruling has allowed investors to invest directly with the fund 
without being charged ‘entry loads’. An entry load of say 2.5% would have meant that on an investment of say Rs.100, only Rs.97.5 would have got invested and Rs.2.5 would have been paid upfront to the distributor as commissions. So investors are well advised to utilise this option of direct investments and thus save on the entry load. And apart from direct investments, other things being equal, invest in schemes with lower expense ratios.
Consider investing through Exchange Traded Funds (ETFs): ETFs are mutual fund schemes which are listed on the stock exchange and can be bought and sold like an equity share. So for investors who can’t seem to decide on which fund to invest in or are unable to access a particular asset class can do so through an ETF at lower costs, greater convenience and higher liquidity.
Benefit from tax saving plans: Investments in tax saving plans like the ELSS offer tax deduction at the time of investment and help you manage your taxes while investing into equities. Do not fall for the ‘dividend rebate’ bait, invest for the long term and enjoy the benefits of compounding your returns.
Put your surplus cash to work: Liquid Fund schemes of mutual funds help manage the short term cash surplus of investors. Instead of keeping it idle in savings and current accounts, it can be invested in liquid funds. It is largely used by corporates and high networth individuals, but it’s an ideal product even for retail investors.
So, these are some of the broad points that an investor can keep in mind while investing for the long term through mutual funds. Happy Investing!
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
without being charged ‘entry loads’. An entry load of say 2.5% would have meant that on an investment of say Rs.100, only Rs.97.5 would have got invested and Rs.2.5 would have been paid upfront to the distributor as commissions. So investors are well advised to utilise this option of direct investments and thus save on the entry load. And apart from direct investments, other things being equal, invest in schemes with lower expense ratios.Consider investing through Exchange Traded Funds (ETFs): ETFs are mutual fund schemes which are listed on the stock exchange and can be bought and sold like an equity share. So for investors who can’t seem to decide on which fund to invest in or are unable to access a particular asset class can do so through an ETF at lower costs, greater convenience and higher liquidity.
Benefit from tax saving plans: Investments in tax saving plans like the ELSS offer tax deduction at the time of investment and help you manage your taxes while investing into equities. Do not fall for the ‘dividend rebate’ bait, invest for the long term and enjoy the benefits of compounding your returns.
Put your surplus cash to work: Liquid Fund schemes of mutual funds help manage the short term cash surplus of investors. Instead of keeping it idle in savings and current accounts, it can be invested in liquid funds. It is largely used by corporates and high networth individuals, but it’s an ideal product even for retail investors.
So, these are some of the broad points that an investor can keep in mind while investing for the long term through mutual funds. Happy Investing!
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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