Modes of investment in Mutual Funds
Investment in mutual funds is easy. You can either do a lump sum investment or invest systematically. Not only that, you can also withdraw units systematically as well as transfer amounts between schemes. Here are the various mutual fund investment strategies to make your MF investing simple and easy:
Systematic Investment Plans (SIPs) These plans are for investors who would like to build a corpus through a monthly savings program.
- Investing a predetermined fixed amount at a regular interval (monthly, quarterly, weekly etc).
- This allows you to collect mutual fund units over time and aids in averaging cost of purchase.
- No need to time the market when you invest through SIPs.
- You can invest amounts as low as Rs 500.
- The entire process is automated, so your investment takes care of itself.
Systematic Withdrawal Plans (SWPs) These plans are for investors seeking a periodical (monthly/quarterly) return on a lump sum investment.
- Under SWPs, you can withdraw small fixed amounts at regular pre-determined intervals (monthly or quarterly) from your mutual fund scheme.
- There are two types of SWP withdrawals that you can undertake - fixed withdrawal and appreciation withdrawal.
- This strategy is useful to receive a periodical cash flow to meet your recurring expenses.
Systematic Transfer Plans (STPs) These plans are for investors who opt for lump sum investing but would like to have the benefits of Rupee Cost Averaging.
- This is a combination of a SIP and a SWP. It involves transferring a fixed amount at a pre-determined interval from a debt fund to an equity fund of the same fund house
- Good mode of investment for people who want to get a higher rate of interest on their corpus because debt funds usually carry tax benefits over savings accounts and at the same time enjoy the benefits of long term appreciation of their investments through equity exposure.
Challenges investors face while investing in mutual funds
At VSK, we understand that with a multitude of funds available for investment today, it may not be an easy decision to select the right funds for your investments. Most investors are confused with the array of products on offer as well as have the following concerns:
- Matching scheme’s objectives with own needs
- Understanding risks associated
- Determining the actual costs of investing
- Reputation of the Asset Management Company (AMC).
- Understanding the jargon such as NAV, exit load etc.
Solution offered by VSK
- Right from selecting the right fund for you to actual investing, VSK assists you at every step.
- We will help you analyse your needs and keep in mind your goals to make sure that you get the fund tailored to your needs and one that can reap rich rewards for you.
- You can view your daily updated MF portfolio statement online, making it easy for you to track your portfolio.