Last Updated on September 11, 2021 at 7:05 pm
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?
🔥Secure your future with our Robo-advisory tool trusted by over 3,500 investors and advisors. From effortless retirement planning to funding your children’s biggest dreams, turn your financial goals into reality. 🔥
Subscribe for money management solutions via email! (Link takes you to our email sign-up form) Join 32,000+ readers in our community.
👉 New Tool Alert! NaviPlan: A Privacy-Focused Multi-asset Tracker and Goal Planner 👈
(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.
In case you missed my Index investing options in India seminar, here it is
Have a go0od weekend!