LAGE RAHO MUTUAL FUNDS

QUITE A FUNNY HEADING TO TODAYS POST,BUT I COULDN'T THINK OF ANYTHING ELSE FOR THIS SECOND POST ON MUTUAL FUNDS.

LAST TIME WE SAW WHAT THE GENERAL CONCEPT OF MUTUAL FUNDS IS ALL ABOUT.TO SUMMARIZE IT IN A SINGLE SENTENCE "MUTUAL FUND IS AN INDIRECT WAY OF INVESTING IN THE EQUITY MARKET,THROUGH THE MEDIUM OF A FINANCIAL INSTITUTION" .


MUTUAL FUNDS CAN EARN YOU MONEY IN TWO WAYS - DIVIDEND AND GROWTH.

1.DIVIDEND :
THIS IS THE AMOUNT YOUR INVESTMENT GENERATES YOU AS AN INTEREST OR IN OTHER WORDS ITS YOUR LOYALTY BONUS FOR STICKING WITH THE FINANCIAL INVESTOR.

SAY YOU INVEST Rs 50,000/- IN A MUTUAL FUND AND IT PAYS 20% DIVIDEND THE YOU ARE BOUND TO EARN Rs 10,000/- WITH YOUR INITIAL INVESTMENT REMAINING INTACT. DIVIDENDS ARE NORMALLY GIVEN ANNUALLY WHILE SOME SCHEMES OCCASIONALLY GIVE MORE THAN ONE DIVIDEND PER YEAR.
SO ITS AS GOOD AS HAVING A FIXED DEPOSIT WHICH GIVES 20% INTEREST PER ANNUM ( A RATE YOU CAN'T EVEN DREAM OF).

2.GROWTH :
IF YOU SELECT THE GROWTH OPTION THEN INSTEAD OF GETTING THE DIVIDEND YOU GET EXTRA NUMBER OF SHARE UNITS,WHICH YOU CAN EN CASH LATER.


VARIETY OF SCHEMES ARE OFFERED BY VARIOUS FINANCIAL INSTITUTIONS.MANY SCHEMES TARGET A PARTICULAR SECTOR LIKE SBI INFRASTRUCTURE FUND WAS TARGETED AT INFRASTRUCTURAL COMPANIES,SO SBI ON YOUR BEHALF WILL BE INVESTING IN INFRASTRUCTURAL COMPANY'S SHARES AND SO ON.
THERE ARE GENERALLY TWO SCHEMES OFFERED :

1.OPEN -ENDED :
AN OPEN ENDED MUTUAL FUND SCHEME ALLOWS YOU TO INVEST OR DISINVEST AS AND WHEN YOU WANT TOO.SO THERE IS 100% LIQUIDITY FOR YOUR FUNDS.

2.CLOSE-ENDED :
CLOSE ENDED MUTUAL FUNDS ON THE OTHER HAND LOCK YOUR FUNDS FOR A CERTAIN PERIOD OF TIME (CAN VARY FROM 1 YEAR TO AS LONG AS 15 YEARS) .THUS THESE SCHEMES OFFER LESS LIQUIDITY.

A SCHEME IS TO BE SELECTED KEEPING IN MIND YOUR FINANCIAL NECESSITIES IN NEAR FUTURE.THUS MUTUAL FUND OFFER YOU A SAFER OPTION TO INVEST IN STOCKS.
BUT AGAIN "MORE THE RISK MORE THE GAINS" .