Article

10 things to keep in mind while reading your fund statement

16 Feb 2018

Untitled Document

Do you ever visit a restaurant, and after having a scrumptious meal, pay the bill without reading it? Or has it ever happened that you paid your mobile phone bill without checking the details? Most people don’t do this because it is their hard-earned money and they want to spend it carefully. And rightly so. Who would want to pay extra unnecessarily?

Therefore, checking your bills and bank statements before paying is one of the good habits that people nurture. However, this is not usually followed as religiously when it comes to mutual fund statements. Yes, fund houses do generate monthly statements and it is very important that you understand it well. Some of the details in your fund details include:  

1. Personal details

This is the first thing you need to check in the fund statement, i.e., is your name rightly printed on the fund document. Then check the address mentioned and see if it matches the one you had provided. If there is any discrepancy, flag it immediately to your relationship manager or mutual fund distributor.

2. Bank account details

Next comes the bank details. These include your bank name, bank account number and IFSC code among the basic details. It would also have your PAN information as it is mandatory by the regulatory body. Ensure that all the details are right as per your records and there is no typing error.

3. Fund name and options

This is where your fund is separated from all other funds you have. The name of the fund along with the option of dividend or growth is mentioned in this section. If the details mentioned in the statement does not matches with your choices, please bring it to the notice of your fund house at the earliest. This would save you from the hassle of staying invested in the wrong fund.

4. Agent/ Broker Name

This highlights the name of the broker or agent if you have one. In case of multiple brokers, it would have their names with a remark of multiple brokers mentioned there. 

5. Folio number

It is like the registration number of the vehicle. This unique code becomes your identity for future transactions. You simply have to quote the number to make any investments in the particular scheme or even invest in any other scheme of the same mutual fund house.

6. Current cost and market value

The current cost helps you to obtain a certain number of units for a certain value of NAV. This gives you a bird’s eye-view of the value addition of your investment in the fund. It is usually of the day when the report is generated.

7. NAV as on a particular date

Net Asset Value (NAV) changes everyday, and hence, it would be representative in nature when you receive it. The NAV printed would be of the day the report was printed and usually there is no drastic change in short-period.

8. Transaction summary

This has a list of transactions that you have done with the fund house. So your Systematic Investment Plan (SIP) or Systematic Withdrawal Plan (SWP) details are also mentioned in this section.

9. Dividend payout and reinvestment

It also mentions the value of dividend payout at the bottom of the section. It even highlights how it is reinvested when you choose for it.

10. Load structure

This mentions the entry and exit load charged while entering and leaving a particular fund. This comes useful when you wish to enter a fund or when you wish to sell units and exit from it. The lower the load structure, the more profitable it is for you.

Mutual funds deal with the money that you have earned after years of hard work. Therefore, it is your own interest to take them seriously. Pay close attention to your mutual fund statement and get errors rectified.

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mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 

Have Referral Code?

10 things to keep in mind while reading your fund statement

16 Feb 2018

Untitled Document

Do you ever visit a restaurant, and after having a scrumptious meal, pay the bill without reading it? Or has it ever happened that you paid your mobile phone bill without checking the details? Most people don’t do this because it is their hard-earned money and they want to spend it carefully. And rightly so. Who would want to pay extra unnecessarily?

Therefore, checking your bills and bank statements before paying is one of the good habits that people nurture. However, this is not usually followed as religiously when it comes to mutual fund statements. Yes, fund houses do generate monthly statements and it is very important that you understand it well. Some of the details in your fund details include:  

1. Personal details

This is the first thing you need to check in the fund statement, i.e., is your name rightly printed on the fund document. Then check the address mentioned and see if it matches the one you had provided. If there is any discrepancy, flag it immediately to your relationship manager or mutual fund distributor.

2. Bank account details

Next comes the bank details. These include your bank name, bank account number and IFSC code among the basic details. It would also have your PAN information as it is mandatory by the regulatory body. Ensure that all the details are right as per your records and there is no typing error.

3. Fund name and options

This is where your fund is separated from all other funds you have. The name of the fund along with the option of dividend or growth is mentioned in this section. If the details mentioned in the statement does not matches with your choices, please bring it to the notice of your fund house at the earliest. This would save you from the hassle of staying invested in the wrong fund.

4. Agent/ Broker Name

This highlights the name of the broker or agent if you have one. In case of multiple brokers, it would have their names with a remark of multiple brokers mentioned there. 

5. Folio number

It is like the registration number of the vehicle. This unique code becomes your identity for future transactions. You simply have to quote the number to make any investments in the particular scheme or even invest in any other scheme of the same mutual fund house.

6. Current cost and market value

The current cost helps you to obtain a certain number of units for a certain value of NAV. This gives you a bird’s eye-view of the value addition of your investment in the fund. It is usually of the day when the report is generated.

7. NAV as on a particular date

Net Asset Value (NAV) changes everyday, and hence, it would be representative in nature when you receive it. The NAV printed would be of the day the report was printed and usually there is no drastic change in short-period.

8. Transaction summary

This has a list of transactions that you have done with the fund house. So your Systematic Investment Plan (SIP) or Systematic Withdrawal Plan (SWP) details are also mentioned in this section.

9. Dividend payout and reinvestment

It also mentions the value of dividend payout at the bottom of the section. It even highlights how it is reinvested when you choose for it.

10. Load structure

This mentions the entry and exit load charged while entering and leaving a particular fund. This comes useful when you wish to enter a fund or when you wish to sell units and exit from it. The lower the load structure, the more profitable it is for you.

Mutual funds deal with the money that you have earned after years of hard work. Therefore, it is your own interest to take them seriously. Pay close attention to your mutual fund statement and get errors rectified.