After the retirement chapter, we now realise that accumulating an adequate retirement corpus requires a long-term investment in mutual funds. Such funds play a huge role in our financial security, so taking some time to research how they operate is absolutely necessary. It’s not just the basics – learning more will enable you to use it effectively. Here are the topics that will be covered:
– What is a mutual fund?
– Who runs a mutual fund and why?
– Regulations around mutual funds from its investor’s perspective
– Several types of MF- Debt, FoF, Hybrid, Equity, Liquid
– How to analyse a mutual fund? – Risk, return, ratios, exposure
– Factors that matter – MF ranking, Direct vs Regular, Growth vs Dividend
– Setting long-term return and risk expectations
– Constructing goal-based mutual fund portfolios
– Logistics- SIP, STP, CAS statements, SWP, DEMAT vs non-DEMAT mode
– Tracking investments
– Mutual fund taxation
– Large scale fund manager
A lot of us have made a visit to the local bakery at some point, probably to pick up a loaf of bread or some of their delectable biscuits. These treats tend to have a distinctive regional flavour – something you won’t find in any other city. That’s what makes them so special – you can’t get them anywhere else!
No matter where I am, Britannia’s biscuits are a constant. Present in both Bangalore and Delhi, they taste, look and weigh the same with absolutely no change in ingredients. This offers customers a highly standardised product which they can rely on.
Britannia is a large-scale baker with a wide distribution network, while your local producer caters more to his loyal customers in the area. He doesn’t have the same expansive reach that Britannia does.
Furthermore, there are “fund managers” operating on a large scale to serve millions of customers, providing each one with the same services.
Large-scale fund managers typically use a mutual fund structure to provide their services. Drawing an analogy, let us recap what we have already discussed.
Here are the takeaways:
– A fund manager is in charge of overseeing your finances. They ensure that funds are properly administered, invested and managed effectively.
– An Asset Management Company (AMC) is a place where a fund manager works and can oversee and invest your money.
– The ‘Mutual Fund structure’ is like a vehicle or mechanism for managing your money. With this, you can strive towards your financial goal.
Now let’s learn how a mutual fund company is set up and functions.
If you invest in a DSLR camera and put it on auto mode, you’ll likely take decent photos just by beginning to click away. However, expanding your knowledge of the camera can help you use it better, resulting in amazing photographs.
Thus, understanding the format of an AMC is quite advantageous. It’s one of those pieces of information that could be useful at any moment.