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

Published: July 7, 2018 at 8:45 am

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?


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(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!

 

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Pattabiraman editor freefincalDr. M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter, Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
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