What is Mutual funds | Mutual Fund for Beginners in Hindi
If you have no idea about what is mutual funds you want to learn about mutual funds as a beginner, then this Hindi video is for you; you will get the following answers about mutual funds –
1. What are mutual funds? Mutual funds types?
2. Basics of Mutual Funds?
3. How to invest in mutual funds?
4. Are Mutual Funds risky?
5. Which mutual funds are good for beginners?
These and many more questions about what are mutual funds and the concept of mutual funds will be explained in this Hindi video.
Introduction
Hello friends, today we will talk about what is a mutual fund. How much only we can see on TV that mutual funds are correct. Still there is fear in my mind. What If I make a loss, are they showing the truth in the ads? Many doubts are there, why this happens? because many of us are not aware of mutual funds, and how it works. The biggest fear in People has that if I make a loss in mutual funds, if I lose my money, and our films have made this stock market Infamous. So here I tell you, there are probably 300, 400, 500 schemes in the market
if you pick the worst scheme you got a very bad advisor and he told you the worst scheme 99% chance that if you stay invested for more than 7-8 years, then your return will be more than FD. You will get a 9%-10% return, even if you select the worst scheme in this market. That’s why there is nothing to fear and it’s almost impossible, that you will lose in the long run. But if you have selected a good scheme, then your Returns can be as high as 22-23%. That means, your average return can be between 10% worst case.
what is mutual funds?
Hello friends, I’m Pranjal Kamra let’s start with Finology. Today’s video is design for beginners who wants to know all the basic things, about mutual funds. First, let’s talk about, what is mutual funds? Many people think, that mutual funds are the only way of investing in the share market. But with mutual funds, you can invest in gold, if you want, you can invest in real estate, you can invest in debt funds, or if, as you know you can invest in share market or equity. You can invest in all four through mutual funds.
But mostly when it comes to the risk and return of mutual funds The risk is high, can be a little volatile, but returns are high. maybe it can go a little up and down, all of this is of equities context. This means the money, that mutual funds invest In the share market, in that context. To understand the mutual fund properly, the important thing is to know the share market, what’re the basics of the share market. Before going further in this video, I would recommend you to watch this video in which I have told the basics of the share market.
so your share markets concepts will be cleared. Now, there are three ways to invest in the share market. First, research yourself, what shares are good and what are bad. and pick your shares for yourself. The advantage is, that you are not dependent on anyone you’re not paying any fees to anyone. Disadvantage is that it’s time taking. It takes time to find good shares and undervalued shares. You don’t have the knowledge to do that and it takes time to get the knowledge. The second is, that you take the help of a research analyst or an investment advisor.
To take help of an expert.
The advantage here is, you don’t have to give time, just dependent on them. The disadvantage is, you have to make regular transactions an advisor can tell you buy this share, don’t buy this They will take their fees, but you have to do that buying and selling, regularly. Third way is mutual funds. through a mutual fund, you can also invest money in the share market. Where you don’t have to track regularly, fees are low, you don’t need to have stock-picking knowledge.
You just have to select a good fund
Now you know the basic purpose of a mutual funds, that purpose is, as for equity funds to give you exposure to the share market and to invest in the share market. Now, let’s find out how it works. See, if you want to invest Rs-20,000 and you want to invest yourself or through an advisor. Advisor has told you, you can invest in MRF, Page Industries or Eicher Motors shares. So that one share is above Rs-20,000, and you only can spend Rs-20,000 so you can’t but it, and that’s a big problem,
By going direct or through a advisor. But, what a mutual fund does is, takes Rs-500 from you and Rs-500 from someone else, like that it will take Rs-500 from 100 other people now it has Rs-50,000, and bought 2 shares of Page Industries. So, if you were alone and invested Rs-500 then you couldn’t have bought Page Industries shares. Now, as there are 100 of you, so together you bought 2 shares of Page Industries. Now, people are 100, but shares 2, so how will thay be divided? So Instead, mutual funds buys 2 shares and gives you mutual funds units. So think, 2 shares were baught, Rs-25,000 each so total of Rs-50,000 is invested 100 people have invested, so the mutual fund will give you 500 units. So all of you have collectively become holders of those 2 shares. So mutual funds allow you to invest in more companies for less money which you cannot do by direct investing. Now, how mutual funds dose this? They build a fund management company, called AMC. That company launches funds and asks people for money.
like, we have launched multicap fund
like, we have launched multicap fund and will do all kinds of medium and small investing. We have this expert, who will manage your money This is their track record. We assure you that we will give you good returns, so come and give us your money. So, people like you like me, who will be interested some Rs-500, some Rs-1000, Rs-10,000, Rs-20,000, Rs-50,000 will give that AMC, Asset Management Company for fund. Like that, all the gathered money will be called AUM, which is Asset Under Management, total money.
So suppose that this time Rs-2000 were taken
So suppose that this time Rs-2000 were taken and 50 people were there, now Rs-1,00,000 have come. Now, that AMC will apoint a funds manager whos an expert in picking shares. Now, he will make a strategie, for where to invest this Rs-1,00,000, Rs-20,000 in one share, Rs-5000 in another and will invest that Rs-1,00,000 in share maket. and will give you that mutual funds schemes units. Which you can sell anytime, money will be sent to your account in 2 days. So this is the basic concept of the mutual fund.
Mutual means shared
Mutual means shared, like sometimes we say at shared rooms at hostels. A mutual fund is such a fund, where everyone’s money is shared and a pool is being made. And, they are buying shares with that pool money. it’s the simple concept of mutual funds. Now, let’s see the advantages and disadvantages. The first advantage is more diversification in little money. If you want to spend Rs-2000-4000, then you cannot buy many shares. But in mutual funds, where everyone’s money is pulled, and is invested in many companies, so your Rs-2000 can be invested in many companies.
which you cannot do directly. With little money, you’ll get more company exposure and get more diversification. An expert in managing your money so if you tell an expert yourself to invest Rs-2000 for you then the expert will say, you have only Rs-2000, my fees are more than Rs-2000, so how can I give you advice. But in mutual funds, where thousands of people like you come together and pay his fees then you get the expertise of a fund manager at a very cheap price. And, the cheap price, is called Expence Ratio.
What happens is, if you are investing Rs-100 in mutual funds
What happens is, if you are investing Rs-100 in mutual funds so for that Rs-100 roughly, it depends on th scheme Rs-98 to Rs-99 is spent on that scheme and the company takes Rs-1 or Rs-2, for the experts salary This is called Expence Ratio. The lesser the expense ratio, the better which shows that your fund manager is charging the least fees. Third, you invested money once, then mutual funds will keep on buying and selling shares. So you do not need to do transactions again and again.
which share to buy and which one to sell.
It’s all at no charge. Absolutely flexible.
First is, the greed of that mutual fund company.
But normal people panic, that the market is crashing and I have to get out
But normal people panic, that the market is crashing and I have to get out so they apply for redemption and take back their funds. The fund manager, in compulsion, has to sell those shares, which he invested at a loss and give you your money back. Where he wants to make more money so he can buy cheaply, but nothing happens by him saying or not saying. If the common man, at large would want to get out of mutual funds then the fund’s manager had to sell the shares and give you your money back . so you and that fund will both make a loss. Third, everything, the entire funds performance depends on the funds manager and research team. So sometimes, the research team wants to save their jobs they don’t buy such stocks, which can give more return but is risky they don’t want to take risks. so many fund managers, to save their jobs and reputation only invests in well discovered and well-known stocks so return are not as high and as you expected, the scheme underperforms. If the fund’s manager wants and has got a good idea.
in small or large cap catagory, even then he cannot invest
in small or large cap catagory, even then he cannot invest because the schemes mandate and directions are restricted for mid caps. For this reason the performence sometimes suffer. This does not happen when you personally invested, any stocks you like, big or small companies, you can invest. In mutual funds, sometimes mandates are restricted. Now let’s talk about the biggest use of mutual funds. Mutual funds should be used for your goal planning. Like, if you want to get your kids married, after 15 years.
you need their education funds after 10 years
you need their education funds after 10 years, if your retirement is in 20 years, so you can select mutual funds, according to these. Let’s start with months, what month is now? June, so June and July are usually college admission times. Your tension here now is fees money if you start from today, and select one fund for kids education and each month, as you expected it if you expect you need Rs-15 lakhs, after 10 years, and from today, you start SIP in one fund. So you get the exprected amount after 15 years.
You can make one fund for kids education, one fund for marrage, one fund for your retiement. And besides that, you can take a fourth high-risk fund if you want to go on a holiday, or have a foreign location dream This fund should be high risk, because it’s luxuary, not compulsion if you cannot go, then your life won’t be ruined. So for this, take a fund that is a little risky it can happen that you make a lot of money and go on a nice vacation, or you make a little less money because it was a high-risk fund so you didn’t get good returns.
Made some losses and went on a domestic vacation
made some losses and went on a domestic vacation. But this is such a goal, where you can take a little risk. You can’t take a risk on a kid’s education, should be a safe fund can’t take a risk on kids marriage, should be safe fund for vacation, you can teke it. So in this case, it’s for an example, not investment advice. According to me, if your planning this then you can take two large-cap funds, and one mid or multi-cap fund for vacation. So like this, you can design your portfolio, according to your goal.
I say it again, this goal planning is just for example. Your exact goal planning on you need, how much money you want, after how many years how important is that money, depents on all that factors. Despite that, how many dependents are there? Is there any other earning member? Are the number of dependents gonna increase? There are many factors. So you have to make a good portfolio, according to these factors. As I said at this video’s end, two funds, which I like. So first, with comparatively low risk, the inequity category.
it’s called Quantam Long Term Fund
it’s called Quantam Long Term Fund. And Second, a little risky Parag Parikh Long Term Equity Fund. Which is a multi cap fund. Besides that, to know what funds I like this year you can check this video, where I mentioned five good funds for 2019. Hope that you cleared you basics about mutual funds, with this video if yes, then don’t forget to like this video. And yes! if you haven’t subscribed to this channel then press this subscribe button and bell icon. So you timely get informative videos like this.
