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Mutual Fund for beginner.

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Benevolent
akki.akki
hello dimersss...

I am new to mutual fund and never invested in it.
I read how mutual funds works but confused from where should I invest in.

Like I am thinking to invest in MF from ICICI/HDFC/IDFC net banking, as I already have account in above 3 banks.

Please advice out these which I should select and which has minimum charges ?

TIA pray
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Benevolent Benevolent
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Regarding investing via Netbanking:

  • Do not invest in MF using any net banking.
  • Create an account in Mfcentral (https://www.mfcentra...m/) and use this to buy any direct mutual fund. 
  • No additional charges & easy to manage.
  • You can also go with Groww (second option) but it will open a demat account (free of cost) as well, which is not required if you don't want to invest in stocks. But is has very user friendly view.
  • I suggest you avoiding kuvera (since very small no. of users using this) or buying from AMC (due to overhead)


Regarding "where should you invest"

  • you need to decide this based on various things.
  • Most importantly, for how long you want to invest this amount 
    • For tenure > 2 years, you can divide your principal amount into 3 parts (one for a small-cap mutual fund (40%), one for an index fund (30%), and one for a flexi cap fund (30%))
    • If you have a large sum of amount to invest, you can also invest 1 part to mutual fund for foreign stocks
    • Invest in Sip mode, instead of doing lumpsum
  • If you want to also claim 80C tax benefits, you can go with ELSS funds. (ELSS will have 3 years lock-in, so you can't withdraw your money before 3 years)
Community Angel Community Angel
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I also have limited knowledge about this. But 1 thing I have heard is to choose Direct funds only rather than Regular funds as direct funds have lower charges.
And about ICICI i know that it only sells regular funds so avoid that. Maybe some one with better knowledge can guide

Post Mogul Post Mogul
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You're on the right track. Prefer to buy direct mutual funds. 'Regular' funds are higher cost as commissions have to be paid to the distributor (banks, aggregators, demat broking companies, advisors, anyone who's bringing you to the mutual fund basically).

Flash007 has given the right advice on mfcentral app. You should try it, it will aggregate your different mutual fund investments in one place. It's a little buggy, however so you can use KFinKartInvestor or myCAMS also if you encounter any difficulties.

However I will diverge from Flash on choice of funds to invest. Since you're new to the game, I would play it safe with Large Cap or Blue chip funds atleast till 25-50% until you gain more experience and have it figured out. For instance multicap funds also invest a substantial part in large caps for safety.
Rather invest in large caps 25-50% (as per your risk taking ability) and then some 10-30% in Mid and small caps. These are much more risky but very high growth in comparison.
Alternatively, you can heed Flash007's advice about multi asset funds here, they will manage your allocation across different market caps, and you can have some part say 25-50% depending on your risk appetite in Debt mutual funds as well (they tend to gravitate around FD rate or better).

Passive investing is another way to go about it through ETFs and index funds. Just check your concentration as several types of funds investing in the same batch of companies doesn't give you adequate risk diversification.

Also if you're investing for the short term, prefer debt mutual funds to protect your capital. Then invest no more than 25% in equity funds.

One more part to note is that you can invest in IDCW option or growth option. It's a choice between claiming dividend or reinvestment of dividend. Growth option is more tax efficient if you can hold for 1-3 years or more, IDCW will help your liquidity situation but you will pay tax on your tax slab rate on returns.

Lastly, to avoid market volatility affecting your investments you should prefer to invest via SIPs vs lumpsum.
I know this must all sound complicated right now, but you will learn gradually by practicing things. As always, when in doubt seek advice from any registered advisor, they will understand your needs and advice better than anyone here. You may choose to not invest through that advisor to save commissions by investing in direct mutual funds also.

Some top MFs : Kotak, SBI, Parag Parekh, Nippon, ICICI, Aditya birla, HDFC in no particular order.

Benevolent Benevolent
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@flash007 how do i identify if its direct fund or indirect ?
Benevolent Benevolent
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@akki.akki

mostly, 1 platform gives only 1 type of funds:

eg:

  • zerodha(coin), paytm money only gives direct mutual funds
  • phonepe gives regular funds

if you don't know about the mutual fund, which you are checking at any platform, in that case check the expense ratio of that particular fund and then google the mutual fund name (name + direct plan) and compare the expense ratio.

for eg:

if you are seeing "parak pariek flexi cap fund" that has expense ratio of 1.5% then google "parak pariek flexi cap fund direct plan" and compare the expense ratio.

Similarly to check the expense ratio of regular fund, google "parak pariek flexi cap fund regular plan" and compare.


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Community Angel Community Angel
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I also have limited knowledge about this. But 1 thing I have heard is to choose Direct funds only rather than Regular funds as direct funds have lower charges.
And about ICICI i know that it only sells regular funds so avoid that. Maybe some one with better knowledge can guide

Benevolent Benevolent
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yes bro, you are 100% correct.

Direct fund is 0.5-1% cheaper than regular funds. You will save lakhs of money in long term by choosing direct mutual funds.

And many platforms sell regular funds only, especially bank net banking ones.

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Benevolent Benevolent
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Regarding investing via Netbanking:

  • Do not invest in MF using any net banking.
  • Create an account in Mfcentral (https://www.mfcentra...m/) and use this to buy any direct mutual fund. 
  • No additional charges & easy to manage.
  • You can also go with Groww (second option) but it will open a demat account (free of cost) as well, which is not required if you don't want to invest in stocks. But is has very user friendly view.
  • I suggest you avoiding kuvera (since very small no. of users using this) or buying from AMC (due to overhead)


Regarding "where should you invest"

  • you need to decide this based on various things.
  • Most importantly, for how long you want to invest this amount 
    • For tenure > 2 years, you can divide your principal amount into 3 parts (one for a small-cap mutual fund (40%), one for an index fund (30%), and one for a flexi cap fund (30%))
    • If you have a large sum of amount to invest, you can also invest 1 part to mutual fund for foreign stocks
    • Invest in Sip mode, instead of doing lumpsum
  • If you want to also claim 80C tax benefits, you can go with ELSS funds. (ELSS will have 3 years lock-in, so you can't withdraw your money before 3 years)
Benevolent Benevolent
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why not thru netbanking ? is there anything hidden which i missed. 
@BAT_MAN
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Deal Cadet Deal Cadet
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Use GROWW APP to Buy Mutual Fund also u can use direct company mutual fund website to buy fund 

Also U can Buy ETF (Nifty Bees, Auto Bees and Many more ) as it'll have the lowest expense ratio.  

And Don't Buy In single tranche buy in sip mode or if u want to invest 3lacs buy in 75k*4 in 4 months to average out the Market 

Pls give karma and upvote if u find it helpful 





Tech Guru Tech Guru
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Groww/kuvera/mf central/direct from site for nil charges and direct funds

Avoid mf via netbanking account

Deal Cadet Deal Cadet
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kuvera

Deal Cadet Deal Cadet
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I have used Groww, Kuvera, Paytm Money, ETmoney  but would suggest groww for beginners. Mutual fund is safe and not as risky as stock market as you invest in a fund which then invests that amount in a lot of companies. 

I had started with direct funds, mainly for 80C. You can look for ELSS funds if you are starting out and want to save taxes under 80C. These ELSS funds afaik are one of the least riskiest option. 

There's also Debt funds, which you can read about

Benevolent Benevolent
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@Alex15 Nice points!

One point to consider

  • For debt funds, does it still make sense after the 2023-24 financial year tax-related changes? To me it doesn't, & nowadays small banks' FDs are at a 7-9% interest rate, which is quite more attractive than the Debt funds
Post Mogul Post Mogul
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Right now it doesn't honestly, that tax amendment was a punch in the gut for the debt fund industry. Interest rates are very balanced.

Generally, however, In a rising interest rate environment debt funds generally outperform FDs and vice versa.


But if you're invested for a short term, market fluctuations can be extreme (good or bad, noone can say with certainty), then it's better to park money in Debt mutual funds (right now of course even an FD is much better than debt MF)

Deal Cadet Deal Cadet
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what is nifty index fund They say it never comes down can anyone help me with that?

Post Mogul Post Mogul
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Nifty Index fund is an index fund of all stocks that are part of the Nifty 50 index. When you buy a Nifty index you buy sort of a share of shares in each of these companies in proportion of their weight on the index.

And it's wrong to think that it doesn't fall, it roughly moves in line with Nifty performance. So when Nifty falls, a day later when they update, you will notice the NAV goes down slightly.


Please Don't be misguided, even debt mutual funds can fall, let alone equity which mostly does fall and rise with the stock market performance of its constituent shares.

Debt MF generally only falls slightly and usually only in case of a default in repayment by any corporate or govt entity (it is extremely rare), and even there is most often substantial recovery through insolvency processing against the defaulter.

Equity funds have a much higher risk and much higher return probability. Equity stocks can even go down to zero - but that is more rare among large companies of Nifty, as a debt MF going down. But a 20-30% decline or more over a few days or months is possible.

Likewise, in the long term, Nifty index fund has multiplied over the long term significantly.

It is a good index to go for. Note that Nifty Index fund is composed entirely of large cap stocks, you can also invest in mid cap and small cap index apart from Large cap and various other index funds for more return (more risk as well) as per your risk bearing ability.

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Deal Subedar Deal Subedar
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Can anyone tell me if "mfcentral" app consolidates already existing mutual funds from all AMCs? I ask this since I have some funds visible in CAMS and some in KFINTECH. If mfcentral shows everything, that would be better for me.

Edit: Seems it does show everything. I will be using this website more. I also raised a request to update my wife's email address in couple of folios which if done, we will avoid going to HDFC AMC office and filling form to do the same.  It says "Success" on its website so not sure if it means it is done or request submission is a success.

Post Mogul Post Mogul
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You're seeing what I've personally also encountered. Certain transactions and service requests glitch out often. You can try to do such requests through Cams instead, that seems to work better.

Since you already processed your request, wait a couple of business days and check their status again. Sometimes using the MFs official website also helps. Or call them up, I've tried speaking and they're generally responsive, just keep all your folio details and verification things handy when you do.

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Helpful Helpful
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People lose out on opportunity cost by investing in direct fund without a mutual fund advisor. i see many people investing by themselves in direct MF but they dont know what to do, what to do when market goes low, what funds to choose , how to harvest capital gains by saving on taxes ....

Its difficult to manage tax profit harvesting ...

We save 0.2 to 1% in direct mutual funds. We lose out on other things.


So , I would suggest ---

If one's portfolio is small , like upto  50 lakhs - choose a good advisor and invest.

If its above 50 lakhs- find a " fee only" advisor ( Charges start from 10k per annum normally ) .


Let me tell a story ..... A client of mine invested in direct funds in 2022 feb. Markets was down till april 23. He went and invested in tax saving 5 year fd ( 125000 rs ) without consulting . I calculate the loss of upto 50000 rs just by this move. By saving 500-1000 rs per annum , he is losing out on 50000 in gains in 5 years.  Experience is the best teacher there is but it will take 5 years for one to learn from this mistakes which a good advisor will help with. 

Deal Cadet Deal Cadet
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MF investment without proper guidance is little bit overwhelming. I would suggest you pm me. I will tell which funds to buy for long term. you will get xirr of more than 12% in long term ie 10years plus.

WhatsAppImage2023-08-19at12.48.06

My portfolio, bought a car so it dipped a little.

Benevolent Benevolent
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wah... thats looks really awesome
Commentator Commentator
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Ditch suggestions that says to invest in certain types of funds. They don't even know your risk profile nor goals nor investment amount but simply suggest how much % you should invest in what type of funds. Don't take investment suggestions from social media.

Go DIRECT mode once you become familiar with mutual funds say after 5-7 years not as a beginner. You lose more in DIRECT when you don't follow basic things like asset allocation, risk profiling,  choice of funds, time frame etc. What is your strategy if markets fall by 25%? What funds do you select? Most invest in MF without any goal. Focus on Returns not on Cost. After reading all these if you still prefer direct mode start with index funds like sensex or Nifty. Many apps are available just use whatever you like. If you prefer an advisor through REGULAR mode you can message me. I'm an NISM certified and AMFI reg MF distributor.

Helpful Helpful
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True that ... people lose more by going direct than by choosing a good advisor


Eg:


A good advisor can provide returns at 15-  24%  ( Past data ) ( varies due to time of investment and asset allocation ) , help you when to buy and when to sell funds , manage stress levels during market crash and save your time and money.


I have seen people achieving 12% by going direct and be happy about it !


They wont even know that they are losing 3% + returns by going direct but what is clearly visible is that they are saving 0.1 - 1% ... So, our mind makes us choose the easier option !

I think its called the BANDWAGON EFFECT in psychology .... just follow the herd. The fin influencer tells and people follow ...


I know the markets are good right now but still i wonder if people going direct are getting such good xirr rates of return .... Pls check below chart and check if your rate of return is better ... 

( Pls ignore the returns that are above 30% in the chart ... they appear like that for a short time in the beginning and is not sustainable )

assetplustoshare-200823


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Benevolent Benevolent
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@rak007 @flash007 @Alex15 I changed my mobile & mail in all the folios thru camsonline and then signed up in mfcenteral.com all the mf were perfectly visible there. kg.
Benevolent Benevolent
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Cool, although I dont think mail & mobile change was required.

Since details should be fetched by Pan directly on Mfcentral.


Benevolent Benevolent
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Suppose I am planning to invest 1 lakh per month in different MF categories :

Large Cap=20k,
Mid=16k,
Small=10k,
Large/Mid Cap=24k,
Multi Cap=30k

And further thinking to break each of above category into multiple fund houses ( probably top 4 fund houses return wise)

I suspect it may lead of overlapping but not sure.
So do let me know if its a good mix or  something needs to be changed !!

@flash007 @rak007 @Alex15
Benevolent Benevolent
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By doing this you will be investing in all the stock market companies itself, then better to find some fund like nifty 5000 and invest 1L directly there.
No point in investing like this.
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