Mutual Funds ........................ Types of Mutual Fund & Benefits of Mutual Funds. #MF #E2

 ◆Types of Mutual Funds ..........

> Equity funds - funds that invest only in stocks and other equity instruments

> Debt funds - funds that invest only in fixed income instruments

> Money market funds - funds that invest in short-term money market instruments

> Hybrid funds - funds that divide investments between equity and debt to create a balance

●Different Types of Mutual Funds

Mutual funds offer one of the most comprehensive, easy and flexible ways to create a diversified portfolio of investments. There are different types of mutual funds that offer different options to suit investors diverse risk appetites. Let us understand the different types of mutual funds available currently in the market to help you make an informed investment decision.

Broadly, any mutual fund will either invest in equities, debt or a mix of both. Further, they can be open-ended or close-ended mutual fund schemes.

>  Open-ended funds

In an open-ended mutual fund, an investor can invest or enter and redeem or exit at any point of time. It does not have a fixed maturity period.

>  Close-ended funds

Close-ended mutual funds have a fixed maturity date. An investor can only invest or enter in these type of schemes during the initial period known as the New Fund Offer or NFO period. His/her investment will automatically be redeemed on the maturity date. They are listed on stock exchange(s).

Let's take a look at the various types of equity and debt mutual funds available in India:

1. Equity or growth schemes

These are one of the most popular mutual fund schemes. They allow investors to participate in stock markets. Though categorised as high risk, these schemes also have a high return potential in the long run. They are ideal for investors in their prime earning stage, looking to build a portfolio that gives them superior returns over the long-term. Normally an equity fund or diversified equity fund as it is commonly called invests over a range of sectors to distribute the risk.

Equity funds can be further divided into three categories:

>  Sector-specific funds:

These are mutual funds that invest in a specific sector. These can be sectors like infrastructure, banking, mining, etc. or specific segments like mid-cap, small-cap or large-cap segments. They are suitable for investors having a high risk appetite and have the potential to give high returns.

> Index funds:

Index funds are ideal for investors who want to invest in equity mutual funds but at the same time don't want to depend on the fund manager. An index mutual fund follows the same strategy as the index it is based on.

For example, if an index fund follows the BSE Index as the replicating index and if it has a 20% weightage in let's say Stock A, then the index fund will also invest 20% of its assets in Stock A.

Index funds promise returns in line with the index they mirror. Further, they also limit the loss to the proportional loss of the index they follows, making them suitable for investors with a medium risk appetite.

> Tax saving funds:

These funds offer tax benefits to investors. They invest in equities and are also called Equity Linked Saving Schemes (ELSS). These type of schemes have a 3 year lock-in period. The investments in the scheme are eligible for tax deduction u/s 80C of the Income-Tax Act, 1961.

2. Money market funds or liquid funds:

These funds invest in short-term debt instruments, looking to give a reasonable return to investors over a short period of time. These funds are suitable for investors with a low risk appetite who are looking at parking their surplus funds over a short-term. These are an alternative to putting money in a savings bank account.

3. Fixed income or debt mutual funds:

These funds invest a majority of the money in debt - fixed income i.e. fixed coupon bearing instruments like government securities, bonds, debentures, etc. They have a low-risk-low-return outlook and are ideal for investors with a low risk appetite looking at generating a steady income. However, they are subject to credit risk.

4. Balanced funds:

As the name suggests, these are mutual fund schemes that divide their investments between equity and debt. The allocation may keep changing based on market risks. They are more suitable for investors who are looking at a combination of moderate returns with comparatively low risk.

5. Hybrid / Monthly Income Plans (MIP):

These funds are similar to balanced funds but the proportion of equity assets is lesser compared to balanced funds. Hence, they are also called marginal equity funds. They are especially suitable for investors who are retired and want a regular income with comparatively low risk.

6. Gilt funds:

These funds invest only in government securities. They are preferred by investors who are risk averse and want no credit risk associated with their investment. However, they are subject to high interest rate risk.

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◆What is the benefit of investing in mutual funds?

One of the key advantages of investing in a mutual fund is that each investor (even with a small investment) gets access to professional money management and expertise. Also, it would be very difficult for an investor to create a diversified portfolio of investments on his own with a small amount of money. With mutual funds, each investor participates proportionally in the return the scheme generates.

Each unit gets a proportional share of gain (or bears loss) from the fund. There is a portfolio report generated for each investor, which tracks all investments and the returns generated by the mutual fund.

●◆Benefits of Mutual Funds

You can be spoilt for choice when it comes to choosing an investment product. There is a large variety of options available, right from fixed deposits, stocks, gold or real estate, insurance, public provident fund and mutual funds. Each product has its pros & cons and risks & rewards. However, if you are looking at an investment option that is professionally managed, diversified and offers a good risk-return trade off, mutual funds can be the right choice for you. Let us look at the advantages mutual funds offer that make them a wise investor's choice.

●Why investing in a Mutual Fund is a wise choice?

Diversification

One of the biggest advantages mutual funds give you is that of immediate diversification. You may not have enough money to spread your investments in varied stocks and sectors, but by pooling money from thousands of similar investors, a mutual fund spreads your investment and hence, risk. It is highly unlikely that all the stocks will go down by the same proportion on any particular day. This ensures that you have not kept all your eggs in one basket and are safe from incurring huge losses from a single bad investment.

Professional Management

Another big benefit of investing in mutual funds is the professional expertise it provides for your investments. Asset Management Companies (AMCs) provide qualified fund managers who, with the help of strong research teams and their own expertise, pick the best options to meet the fund's objective. This saves you time and the stress of constantly monitoring your investments and wondering if you made the right buy or sell decision. With mutual funds, you do not have to worry about market swings.

Affordability

You may want to buy shares of large companies or want to invest in big companies in a particular sector of choice. However, you may not have the money to make a big investment. Mutual funds trade in big volumes, giving their investors the advantage of lower trading costs. Anyone can start an investment in a mutual fund through a Systematic Investment Plan (SIP) with as little as Rs 500.

For example, say Pooja has just started her career and wishes to put aside atleast Rs 48,000 annually to go on an overseas vacation after three years. Instead of waiting to collect a lump sum of Rs 48,000 to kick start the investment, mutual funds allow Pooja to invest a small sum of Rs 4,000 every month, in the form of a SIP. This makes it affordable for Pooja and at the same time keeps her goal on track.

Liquidity

You can easily move your money in and out of mutual fund investments. Investments in open-ended funds can be redeemed in part or as a whole any time to receive the current value of the units.

Tax Benefits

There are various tax benefits available on your investments in mutual funds. For example, investments in Equity Linked Savings Schemes (ELSS) qualify for tax deductions under Section 80C of the Income Tax Act. There is no tax on capital gains on units of equity schemes held for more than 12 months.

Schemes other than equity-oriented schemes are treated in the debt category for tax purposes. Short term capital gain is applicable for redemption of debt mutual funds within 3 years. Long term capital gain (more than 3 years) from debt mutual funds is taxable after claiming the benefit of Indexation.

Well Regulated

In India, all mutual funds are regulated by the Securities and Exchange Board of India (SEBI). All mutual funds are required to follow transparent processes, as laid down by SEBI, protecting the interest of investors. Further, SEBI makes it compulsory for all mutual funds to disclose their portfolios every month.

Click here to see What is Mutual Funds ?

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Mutual Fund ............... What is Mutual Fund ? #MF #E1

What is Mutual Funds ?

What if you could invest your money and have someone else professionally manage it for you? Services like these do exist, but they come with a requirement of high amounts of capital or money to be invested. What if you could avail such a service, even with a small investment and get the advantage of professional money management? Well, this is possible by investing in mutual funds.

Now Come to the main point.........

A mutual fund is essentially a common pool of money in which investors put in their contribution. This collective amount is then invested according to the investment objective of the fund.

The money could be invested in stocks, bonds, money market instruments, gold and other similar assets. These funds are operated by money managers or fund managers, who by investing in line with the specified investment objective attempt to create growth or appreciation of the amount for investors.

For example,  a debt fund will have its specified objective to invest in fixed income instruments or products like bonds, government securities, debentures, etc. Similarly, an equity fund will invest in stocks and other equity instruments.

How is a mutual fund set up?

A mutual fund is set up in the form of a trust, which has a sponsor, trustees, Asset Management Company (AMC) and custodian. The trust is established by a sponsor who is like the promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unit holders. The custodian, who is registered with the Securities and Exchange Board of India (SEBI), holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over the AMC. They monitor the performance and compliance with SEBI Regulations.

The AMC employs professional money managers, having expertise in investing in equity, debt or both, who then invest the collected amount from investors and manage it on their behalf.

The AMC may have several mutual fund schemes with their specific investment mandates. An investor can choose which scheme he or she wants to invest in, based on the given mandate or objective.

All AMCs are governed by a Board of Directors and come under the SEBI (Mutual Funds) Regulations, 1996. The regulator or SEBI has set clear mutual fund regulations and requires all mutual fund schemes of an AMC to clearly spell out the fund's objectives in its prospectus that an investor must read before he/she invests in a mutual fund.

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Stock Market Knowledge ............ How does the Stock Market Works ? #SMK #E2

How does the Stock Market works ?

We all know how important it is to invest money in the right avenues to grow wealth. Stock market investment is one such lucrative option that has rewarded steadfast investors with high returns over the years. However, to gain the maximum out of a financial instrument, it is essential to know about its workings. Let’s get back to the basics and learn how the stock market works in India Read on!

Participants of the Stock Market

The stock market is an avenue where investors trade in shares, bonds, and derivatives. This trading is facilitated by stock exchanges, which can be thought of as markets that connect buyers and sellers. Four participants are involved in the trading of shares in the Indian stock market.

1. Securities and Exchange Board of India (SEBI): 

SEBI is the regulator of stock markets in India and ensures that securities markets in India work in order. SEBI lays down regulatory frameworks were exchanges, companies, brokerages, and other participants have to abide by to protect investors’ interests.

2. Stock exchanges: 

The stock market is an avenue where investors trade in shares, bonds, and derivatives. This trading is facilitated by stock exchanges.In India, there are two primary stock exchanges on which companies are listed.

●Bombay Stock Exchange (BSE) – Sensex is its index

●National Stock Exchange (NSE) – Nifty is its Index

3. Stock brokers/brokerages: 

A broker is an intermediary ( person or a firm) that executes buy and sell orders for investors in return of a fee or a commission.

4. Investors and traders: 

Stocks are units of a company’s market value. Investors are individuals who purchase stocks to become part owners in the company. Trading involves buying or selling this equity. To understand how to share market works, the next thing is to learn about primary and secondary markets

1. Primary Markets

The primary stock market provides an opportunity to issuers of stocks, especially corporates, to raise resources to meet their investment requirements and discharge some obligations and liabilities.

A company lists its shares in the primary market through an Initial Public Offering or IPO. Through an IPO, a company sells its shares for the first time to the public. An IPO opens for a particular period. Within this window, investors can bid for the shares and buy them at the issue price announced by the company.

Once the subscription period is over, the shares are allotted to the bidders. The companies are then called public  because they have given out their shares to the common public.

For this, companies need to pay a fee to the stock exchanges. They are also required to provide all important details of the company’s financial information such as quarterly/annual reports, balance sheets, income statements, along with information on new projects or future objectives, etc. to the stock markets.

2. Secondary Market

The last step involves listing the company on the stock market, which means that the stock issued during the IPO can now freely be bought and sold. The secondary stock market is where shares of a company are traded after being initially offered to the public in the primary market. It is a market where buyers and sellers meet directly.

Trading in the Stock Market

Once listed on the stock exchanges, the stocks issued by companies can be traded in the secondary market to make profits or cut losses. This buying and selling of stocks listed on the exchanges are done by stockbrokers /brokerage firms, that act as the middleman between investors and the stock exchange.

Your broker passes on your buy order for shares to the stock exchange. The stock exchange searches for a sell order for the same share.

Once a seller and a buyer are found and fixed, a price is agreed to finalize the transaction. Post that the stock exchange communicates to your broker that your order has been confirmed.

This message is then passed on to you by the broker.

Meanwhile, the stock exchange also confirms the details of the buyers and the sellers of shares to ensure the parties don’t default.

It then facilitates the actual transfer of ownership of shares from sellers to buyers. This process is called the settlement cycle.

Earlier, it used to take weeks to settle stock trades. But now, this has been brought down to T+2 days.

For example,

If you trade a stock today, you will get your shares deposited in your Demat/trading account by the day after tomorrow (i.e. within two working days).

The stock exchange also ensures that the trade of stocks is honored during the settlement.

If the settlement cycle doesn’t happen in T+2 days, the sanctity of the stock market is lost, because it means trades may not be upheld.

Stockbrokers identify their clients by a unique code assigned to an investor.

After the transaction is done by an investor, the stockbroker issues him/her a contract note which provides details of the transaction such as time and date of the stock trade.

Apart from the purchase price of a stock, an investor is also supposed to pay brokerage fees, stamp duty, and securities transaction tax.

In case of a sale transaction, these costs are reduced from the sale proceeds, and then the remaining amount is paid to the investor.

At the broker and stock exchange levels, there are multiple entities/parties involved in the communication chain like brokerage order department, exchange floor traders, etc.

But the stock trading process has become electronic today. So, the process of matching buyers and sellers is done online and as a result, trading happens within minutes.

Pricing of Shares in the Stock Market

The key to making money in the stock market is to learn how to properly value a company and its share price in the context of the Indian economy and the firm’s operating sector.

Let me explain to you how stocks are priced through a simple example.

Let’s say you bought a notebook for ₹100. The next day, a friend of yours offered you to sell it for ₹150 to him.

So, what’s the price of the notebook then?

It is from ₹150. You can encash ₹150 by selling the notebook to him.

But you choose to reject his offer hoping that your other friends may bid more than ₹150.

The very next day 3 of your friends offer you ₹200, ₹250 and ₹300 for the notebook respectively.

Now, what’s the price of the notebook?

It’s ₹300 as this is the highest bid for your notebook. You now know that your possession is valuable and decide to reject the current offers, hoping for a higher bid tomorrow. However, the next day, a fellow student brings a better quality notebook to school with shinier pages.

Your friends are now attracted to this notebook more than yours and this leads to a dip in the value of your notebook. Now only a handful of people are willing to pay for your notebook and that too at the last quoted price i.e ₹300.

This is exactly how demand and supply affect the price of a share in the stock market.

When the students were optimistic and ready to pay higher cash than its current price, the price appreciated. When a lesser number of students wanted your notebook, the price fell down.

Just keep this small concept in your mind:

When the demand for shares is more than supply, price rises.

When the demand for shares is less than supply, price falls.

The Indian stock exchanges, BSE and NSE, have algorithms that determine the price of stocks on the basis of volume traded and these prices change pretty fast. So this is how the stock market works in India. There is definitely more to it however this is a good starting point to develop further understanding.

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Stock Market Knowledge............. What is the Stock Market ? #SMK #E1

What is Stock Market ? The stock market is where investors connect to buy and sell investments — most commonly, stocks, which are shares of ownership in a public company. The term "stock market" often refers to one of the major stock market indexes, such as the Dow Jones Industrial Average or the S&P 500. Because it's hard to track every single stock, these indexes include a section of the stock market and their performance is viewed as representative of the entire market. You might see a news headline that says the stock market has moved lower, or that the stock market closed up or down for the day. Most often, this means stock market indexes have moved up or down, meaning the stocks within the index have either gained or lost value as a whole. Investors who buy and sell stocks hope to turn a profit through this movement in stock prices.

Click here to see How does the Stock Market works

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West Bengal Best Private Engineering Colleges

 No College is Good or Bad & not everyone can make into IITs & NITs , but life goes on.It all depends upon how You are going to perform & how high Your ambition are and Success will follow You........................

College Ranking is based on Placement, Faculty, Infrastructure, Quality of Education, Lab , Library facilities .

Here are the list of TOP 10 Private Engineering Colleges in Kolkata :

1. IEM

2. Heritage Institute of Technology,Kolkata

3. Techno Main ,Saltlake , Kolkata

4.Academy Of Technology

5. Haldia Institute of Technology

6. Techno International New Town

7. RCC Institute of Information Technology

8. St. Thomas' College of Engineering and Technology

9. B.P. Poddar Institute Of Management And Technology

10. Netaji Subhash Engineering College