Stop your MF SIPs and start buying MF units! FAQ Video Series Part 2

No, this is not a click bait. I am being serious. There are several benefits to stopping your mutual fund SIPs and manually investing. I am working on an ebook – Mutual Fund FAQ: The Basics – that will provide short, easy to understand answers to 100+ common and basic questions that new investors ask. In parallel, I am also making a short video answer to each of the questions covered. This is the second part.

In the first part, we considered

(1) What is an equity mutual fund and a non-equity mutual fund? (2) What is a mutual fund NFO? Should we invest in NFOs?

(3) What is a debt mutual fund?

(4) Can a mutual fund provide regular income?

Do start there if you have not done so: Mutual Fund Basics FAQ: Video Series – part one

In the second part, we discuss the following:

1: Growth Option or Dividend Option? Which Type of Mutual Funds should I choose?

2: Can I get my money back from mutual funds? How?

3: Do Mutual Funds offer any interest?

4: Can I book only profits from mutual funds?

5: How do mutual fund redemptions work when I make multiple investments? FIFO

6: How are mutual funds taxed? (Latest rules – 2018)

7: What is the grandfathering rule for Equity Fund LTCG taxation? (previously published)

8: What is the difference between a mutual fund SIP investment and a lump sum investment?

9: What is a mutual fund dividend?

Notice that many (if not all) of these videos revolve around mutual fund units. Stop thinking about SIPs and lump sums and think about mutual funds as the sale and purchase of units.

Benefits of stopping your mutual fund SIPs & manually buying units

1)  You become more disciplined.

2) You finally understand what a SIP actually is and that it is no different from a lump sum investment.

3) You recognise that you are buying and selling mf units.

4) You understand profit and loss and taxation rules better.

5) You can manage your portfolio better. You control when you invest, where you invest and you recognise that you simply cannot keep investing hoping it will all turn out okay in the end as the sales guys claim. Want an example? Here: Why we need to gradually pull out of equity investments well before we need the money!

Sure, sure the sellers will crib and say behavioural finance this and behavioural finance that. They can all go jump for all I care.

1: Growth Option or Dividend Option? Which Type of Mutual Funds should I choose?

2: Can I get my money back from mutual funds? How?

3: Do Mutual Funds offer any interest?

4: Can I book only profits from mutual funds?

5: How do mutual fund redemptions work when I make multiple investments? What is the FIFO rule?

6: How are mutual funds taxed? (Latest rules – 2018)

7: What is the grandfathering rule for Equity Fund LTCG taxation? (previously published)

8: What is the difference between a mutual fund SIP investment and a lump sum investment?

God that is an awful screengrab!

9: What is a mutual fund dividend?

By the way, I have several videos on the freefincal youtube channel you can subscribe (and click the bell icon) to receive instant notifications.

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Have a go0od weekend!

 

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8 thoughts on “Stop your MF SIPs and start buying MF units! FAQ Video Series Part 2

  1. For active investors, investor can buy units actively as you mentioned. But definitely not those who are busy in their own profession. The main advantage of SIP is as SIP deduction happens automatically from bank account, this ‘auto’ feature makes investor save automatically and helps them to save every month without timing the market.
    I really appreciate your work sir. Very useful

    1. So they are so busy to not be able to spend 30 seconds to invest each month. Then they should not invest because risk should be managed actively by everyone.

      1. Have you written somehere in detail the modus operandi for the same.
        Does one wait till the market corrects and if it does not then invest at the end of the month.
        How can one make a decision? Regular and Direct investing has a straight call to understand how things work on the same lines do we have any evidence of the difference in lump sum in a month than a SIP route?

        The odds of getting it ALL RIGHT but not be in favor.

      2. My point in my message is how SIP inculcate saving habit due to its ‘auto’ feature. Investing monthly Rs. 5ooo through SIP for my son’s education, I have accumulated Rs. 16 lakhs during last 10 years of investment at approx 18% XIRR. Now is the time to manage risk when I need funds for his education. Last 10 years I took risk with AUTO mode without timing the market. While I highly appreciate your research, I beg to differ with you regarding your statement that 30 seconds required to invest each month. Yes in SIP 30 seconds also not required. But in active investment investor need more time to monitor the market and time the market. Your method is really good for those who have time and interest to monitor the market. Once again, I salute you for your research work which is very useful.

        1. First of all I am not saying one should time the market (although it is pretty easy to do so). Second of all managing risk is mandatory and not a choice however way you invest. MOst people are clueless about this.

  2. Looking like a Philosopher (Ramakrishna Paramahamsa) in that screengrab Professor. Not that you aren’t one, but now here’s a proof.

  3. First of all I am not saying one should time the market (although it is pretty easy to do so) …..Sir , please elaborate on this point .

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