I am trying to understand how MFs work, in India. I guess its the same everywhere. This is what I know. Please correct me here:

• The fund mgr collects money from small investors (‘000s of them) and invests in the stock market for the returns.
• Is there a way to keep a tab on the MFs I have invested to see how they are doing
• Can the MFs be switched if the one is not working out
• Risks. Chances of losing everything?

My auditor is asking me to divest. He is saying that MFs give good returns. I want to understand the concept before I jump in.

KM

I am not sure about MF in India. But in Canada/UU, this is how it works:

Is there a way to keep a tab on the MFs I have invested to see how they are doing?

YES. Statements sent by institutions would indicate performance. Better yet, software such as Quicken can track as long as you add accounts in Quicken using the correct MF code. Ex: TDB 330 is a TD Mutual fund.


Can the MFs be switched if the one is not working out?

MAYBE. Depends on the MF itself and the fine prints behind it. Some have switch fee, some can be negotiated with the Financial Advisor (if you have one) and others may have to be sold and then a new one bought (with no fee but with tax implications due to sale)

• Risks. Chances of losing everything?
In theory, YES. however, due to the inherent conept of MF, chances of losing everything is distant.

There is no blanket assurance that MF give better returns. Better is a relative term and you could own 15 to 25 well diversified stocks in a million $ portfolio and you could get higher returns. There are various types of MF. Lower risk ones normally will have lower returns and vice versa. It all depends on what your risk tolerance is.

In any case, for a beginner investor, a MF might be a great way to start since you are handed a decently diversified fund to choose from with a small amount of money.

Hope this helps.

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Dimple2001

Why we should not invest in mutual fund ?

Now see by investing in MF what we are doing. We are giving our money to others (Fund managers) and giving them authority to use our money in what so ever manner they like. Further what they do we have no right to know. Even in case of our Loss of money, they earn. Look at the salary of these fund managers and staff. Their salary packages are in millions.

Is this sound principle of business. Rather than giving money to these jerks , you can do business with that money and at least you would be knowing what you are doing.

Instead of mutual funds.Pick up some ETF's and start a systamatic investment plan. You will be richer this way instead of paying mutual fund charges. once you are more comfortable, depends on your ability, pick up atleast 30 shares, and invest everymonth.don't exceed more than 3 to 5% on any shares.

All those fund managers are good in showing charts but very little in performance.

somewhere I remember you writing, buy a land in India. I still feel that's the great idea, did you consider that ?

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Originally posted by Val

Instead of mutual funds.Pick up some ETF's and start a systamatic investment plan. You will be richer this way instead of paying mutual fund charges. once you are more comfortable, depends on your ability, pick up atleast 30 shares, and invest everymonth.don't exceed more than 3 to 5% on any shares.

All those fund managers are good in showing charts but very little in performance.

somewhere I remember you writing, buy a land in India. I still feel that's the great idea, did you consider that ?

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Quote:

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Originally posted by KumarM

Quote:

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Originally posted by Val

Instead of mutual funds.Pick up some ETF's and start a systamatic investment plan. You will be richer this way instead of paying mutual fund charges. once you are more comfortable, depends on your ability, pick up atleast 30 shares, and invest everymonth.don't exceed more than 3 to 5% on any shares.

All those fund managers are good in showing charts but very little in performance.

somewhere I remember you writing, buy a land in India. I still feel that's the great idea, did you consider that ?

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What's an ETF and how the process work?

Hmm....u remember the land stuff? So cool. I need to divest.

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Thx. I dont know if ETFs are in India also. Will check.


KM