Things to check in your Mutual Fund Account Statement?

Things to check in your Mutual Fund Account Statement?

A mutual fund statement is pretty much like your bank account statement. It is a complete summary of your mutual fund investments. While formats and layouts may vary across fund houses, the basic components remain the same.

The account statement is emailed to you occasionally or you can download the same from the respective Asset Management Company's (AMC) website. You will have to go to the AMC (mutual fund company) website and register yourself if you have made investments from other aggregators. It is important to know that in spite of making investments from any source, you can always access the same on their website and sell/buy more from there.

The account statement looks like this:

1. Keep a record of your folio number. It is your reference number for the investment made. Each time you make an additional investment in an AMC, ensure that the folio number is the same. This will make it easier to track all your fund investments with a particular fund house. If you don't use the same folio number, you will have many folio numbers over time and this will make tracking your investments difficult.

2. Ensure that the name of the bank and the account number are correct to avoid facing problems at the time of redemption.

3. Make sure you are KYC compliant and have made your FATCA declaration. FATCA is a US law and as per an India-US treaty, Indian fund investors have to declare if they are US citizens or not.

4. If you have invested through an agent, his/her name code and EUIN number will appear in the account statement. Take a note of it.

5. See your transaction summary. This section mentions the types of transactions that you have opted for, which also include purchase, SIPs, SWPs, etc.

6. Check the NAV date on your account statement. If you invest before 12 pm, then same days NAV is used, if you invest around 3 pm, it is possible that your investments would be made on the following date. Hence, you must verify the same.

6. Understand your load structure. It gives you details about the entry and exit cost of your investment.

A fund statement is generated within two to three days of your investment in a particular scheme. You receive it within seven to ten working days if you have opted for a physical copy or in three to four working days on your registered email address. If you have not received one, you can always get in touch with the AMC that is managing your fund.

Wealth Cafe Actionable - You should verify your account statements after you have made investments. It is prudent practice to save the same regularly for any future reference.

How to Invest in Mutual Fund guide - 06/28/2019

When is the right time to start your investments?

In our workshops, we have discussed with so many people who say that they are waiting for the markets to go down to start their investments or they are waiting to have enough before they start. Some may even argue to say that they want to enjoy life today and will invest tomorrow (in spite of having enough savings in their bank account). Some feel they are just waiting for the right time to start investing.

The RIGHT time to start your Investments is NOW

The best time was yesterday, but now that is gone right time is today. With every day you push to invest your money, you are reducing your money from growing and making wealth for you.

If you are following the basic rules, you will definitely get it right. It is quite usual for you to feel a bit nervous when you are investing in unfamiliar instruments for the first time. But you will learn on the way. So, don't let your nervousness delay your investments further.

To help you understand what you are missing every time you are delaying your investment choice, we have tabulated below an example:

	Priya	Shreya
Sip	5000	5000
SIP start Age	25	30
SIP Stop Age	30	60
Investment till Age	60	60

SIP done for how long (in years)	5	30

Amount Invested	25,000	1,50,000

At the age of 60, returns they got	22,32,125	21,73,726

In the above example, Priya started at the age of 25 and invested for only 5 years, until she was 30. However, she did not withdraw her investment out until she was 60.

On the other, Shreya started her investment only at the age of 30 and continued to invest until she was 60. She invested around INR 150,000 and Priya invested around INR 25,000.

You would obviously expect Shreya to make more money than Priya. But, it is Priya who has made great returns from just an investment of INR 25,000. This is the power of starting early.

When you start your investments today, you have to invest less and you will reach your goals sooner.

START NOW !!

It is possible that some of you may be anxious as to how should you start your investment and where to put your money. For all of you do not worry, doing a SIP for your mutual fund is a great start and we have written many blogs on how should you invest and are writing more.

Always try to match your goals with your investment choice. This will help you eliminate unwanted choices, and identify the right ones. It will also save you a lot of headaches later. As a rule, avoid risky investments like stocks, equity mutual funds for short-term goals (3 years and less than 3 years). This is because equity can be extremely risky and volatile in the short-term. You should try to preserve your capital and try to secure stable returns for short-term needs. However, if you have time in hand, you can be a little adventurous and invest in equity. It will help you earn a few extra percentages. This is because equity has the potential to give higher returns than any other asset class over a long period of time.

Don't forget to review your investments periodically. Investing and forgetting all about it is not a great strategy. You should regularly check how your investments have done over a period of time.

Wealth Cafe Actionable - Where you are investing in Equity for long term goals, do not forget to sell your risky investments at least three years before your goal and park the proceeds in a safe avenue. This is to ensure that you have the money safely parked somewhere when you need it and the market risk will not hamper your goals. Start your investments now!!

How to Invest in Mutual Fund guide / Mutual Funds - 06/28/2019

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Timing the market for your SIP investments?

Many of us keep waiting for that right time to invest.

A popular stock-market adage is 'Time in the market is more important than timing the market'. It may be a popular principle but unfortunately not many observe it in practice. Many people based on the basic discussions, newspaper articles or just their basic reading believe that they understand the trends of the market and start timing the market to make investments.

The curious thing about market timing is that the market almost unfailingly moves in the opposite direction to what you would expect. If you buy shares in a company thinking that 'this' is the right time, you are appalled by the fact that the stock starts to fall just after you buy it. Similarly, if you sell out your shares in a company because you have a strong gut feeling that it's going to collapse, you find it racing ahead of just about everything. It must have happened to the smartest of us.

Timing the investment in Mutual Funds

If you think you are immune to this behavior just because you invest in mutual funds rather than directly in stocks, you are mistaken. Mutual funds investors frequently try to time their systematic investments in response to the market's ups and downs. When the market is falling, they stop their SIPs. When it is rising, they increase their SIP amounts. This invariably backfires.

SIPs work best when the markets are volatile. When the markets are high, you buy fewer units of your mutual funds through SIPs. When the markets are down, you buy more units for the same amount. This enables you to average your investment cost over time. But if you stop SIPs when the markets are down, you miss out on lowering your total investment cost. And if you increase your SIP amounts when the markets are on the rise, you keep averaging your overall cost upwards.

Now you may say that the solution to this problem is to do just the opposite: stop with SIPs when the markets are rising and increase the SIP amounts when they are falling. Unfortunately, timing the market in this manner is just as unfruitful. First, it is counter-intuitive. Many investors will have difficulty in carrying through their decision to invest when the markets are down and sell when they are up. And second, you can never really know how long the market may keep going up or falling. All in all, it's quite unproductive to time the market.

How SIP Works to make the most of the market trend

When the market goes down - you get more Mutual Fund units

When the market goes up- you get lesser Mutual Fund units

Hence, the SIP helps to average the cost over a period of time and makes the most of our money. We may not always know that the market is down now, we should buy more or otherwise, SIP is automatically taking care of that for us.

The beauty of SIPs is that by definition they prevent you from timing the market. SIPs are about discipline. You decide an amount and a frequency, which in most cases is monthly. Then you keep investing in the mutual fund of your choice, irrespective of where the market is. Of course, you can increase your SIP amount yearly as your pay increases but then invest it evenly till the next revision. Since the markets are volatile, you will naturally benefit from the power of rupee cost averaging, which will increase your returns.

Wealth Cafe Actionable - As we have said, SIPs is an easy way to invest your money and it on its own makes the most of the market trend. Once you have started SIP, just keep reviewing your asset allocation occasionally and let them be.

How to Invest in Mutual Fund guide / Mutual Funds / Uncategorized - 06/28/2019

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