You must have heard about Mutual Funds earlier there was Phrase somewhat like “MUTUAL FUNDS ARE RIGHT” And since very long you must be listening Mutual Funds are subject to Market Risk please read the scheme related documents carefully before investing Now the question Arises Is Investing in Mutual Funds is Actually Right? or is it just a risky thing which you must avoid Well i will share some fun facts related to it Till Date, In Indian Mutual Funds there are around 2.57 crore SIP Accounts are there who invest regularly on Mutual funds In fact as per 2019 JANUARY data, Total AUM Means Asset under management or Fund under management it’s value is 2452085 trillion rupees not billion its value is in Trillions if it compare it with 2009, it’s value has increased by 5 times and if compare it with 2014 means in just 5 years it has increased by 2.5 times now by considering these facts, Is it Truly good to invest in Mutual funds? can mutual funds make us wealthy as it shows and said well my last week video was on Intelligent investor on that videos comment many of you’ll asked me to make a video on Mutual Funds and clear the doubts related to what actually mutual fund is ? therefore today i am making a video on mutual funds and hopefully all your doubts will get clear and there’s another reason of making a video on this topic, that reason will get clear at the end of the video Now the Very first thing which i will talk about is WHAT EXACTLY MUTUAL FUND IS?
If you have seen my Richest man in babylon book summary then you must be aware if you haven’t watched it then do watch it now in that video i have explained how a poor normal person becomes the richest man in Babylon just by following three simple rules, Now i will share those rules briefly the very first rule out of three was PAY YOURSELF FIRST Means to keep 10 percent of your income, whatever amount you are earning keep 10 % with you and spend your life with remaining 90 percent second rule was to invest the money which you have kept with yourself, means to invest your savings so that money can work for you instead of you working your entire life for that money means in simple words invest your money so that your money grows gets multiplied now a normal person who keeps these steps in mind and save 10 percent money and think of investing then in todays time there are many options which he gets related to investment example: Stocks, share markets, real estate gold etc suppose a man has less amount therefore avoids real estate and he knows that gold is not giving good returns from several years,
so he decides to invest in Stocks because investing in stocks doesn’t need large amount and can get good returns as well now i am assuming that you know what investing in stocks means, if you don’t know then link mentioned below so do watch it now lets back to business, Suppose if that man go to share market to invest its not like that he go and invest and immediately he will get profits, no thats not gonna happen however in stocks along with money there are three more things which needs to be kept in mind 1) Risk 2) Time and 3rd and the most important knowledge because from different-different sectors thousands companies buying a share from the company which can give maximum profit or can give profit without any loss, its not an easy thing it requires a lot of knowledge and also needed a lot of time investment which isn’t possible by lot of people hence their risk increases, Normally it happens many people invest in stocks by themselves because of lack of proper knowledge they face a huge loss Well Mutual Funds come in between to deal with these problems in mutual funds instead of investing money in stocks or bonds directly ,You give money to group of experts their work is to invest your money at right time to a right place with the help of their Research & knowledge through which you can get maximum profit without giving your time and Mutual Funds Decreases Your Risk example: suppose there’s a man who has 100 rupees to invest then with that amount he can buy share of only 1 company but in mutual funds, just like that man there are many more people who give money to mutual fund company suppose nine more people give 100 rupees to mutual funds company so mutual fund company has 1000 rupees in total with which they become capable of buying 10 different companies shares which decreases risk, lets understand it again with an example:suppose a man buys a share from one company, if that company faces loss then the money of that person will be drowned in the stock market but because of mutual funds if one company faces loss then too he won’t be in a big loss because his money was invested in different-different companies This thing is also known as Diversification which is done by Mutual funds, it improves your returns chances and decreases your risk now to share what Types of Mutual Funds are i will use GROW App which even i am using for investment now the another good thing about Mutual funds is that they don’t do Diversification only on stocks Diversification can be done in different-different things for now if i share 4 common types of mutual funds the first is Equity Mutual Funds in which principally investment in done only on stocks second Debt Mutual Funds:in this money is invested in things like Government Bonds, Company Debentures and Fixed income assets now what all these things are i won’t explain it here in detail, but the thing needs to be understood is in these types risk are lesser compare to Equity Mutual Funds and obviously if risk is less then for sure returns will also be Less 3rd) Hybrid funds, here money is invested in different-different Asset class example: if 50% is invested in Equity mutual funds then 50% will be invested in Debt Mutual funds now last 4th is Index funds it’s an Passive form of Fund management, in which money is invested in market index means in entire market instead of just selecting few companies example: if you buy index fund of Nifty 50 then any company which comes under Nifty 50 and returns which they will get same return will be given to you as well now which is the best mutual fund amongst this i will tell you at the end of the video now let see whether you should invest in Mutual Funds or Not? well if you think that after investing in mutual funds you’ll become rich in just one day Then sorry thats not gonna happen so forget about it and if you think that mutual funds can make you rich is few years that forget that too but still as per me you should invest in mutual funds because of three big reasons No.1) Rich Dad Poor Dad Robert Kiyosaki has said in His book ” ITS NOT HOW MUCH YOU MAKE BUT HOW MUCH YOU KEEP AND HOW HARD IT WORKS FOR YOU.” Maximum people learn to earn money and with experience they start earning well too but still they fail to become Rich, why? because they learn to spend more, they keep on increasing their liabilities however the very first step of becoming Rich is to know how to save money and should know how to invest that savings same thing is taught to us in the book The Richest Man in Babylonhence when you start investing in Mutual funds somewhere it will make you an Investor mentality person which is really very important Reason
No.2) Inflation I still remember when i was in school at that time one vada pav used to be of 3 rupees today that same thing is of rs 10 – 15 You must have heard someone saying” THINGS WERE VERY CHEAP IN OUR TIME.” Today everything is getting so expensive now if we say this more technically Things are not getting expensive but value of money is reducingWhy Money value is going down then do watch my video “SECRETS OF MONEY.” for now important thing is every year Money value is decreasing Because of Inflation which is increasing by 5 percent every year means if someone has kept 1 lakh rupees in their cub board then its value today would be around 95000 means loss of 5 percent, hence it is important to invest your money somewhere Mutual Funds is a good option to invest and to avoid the loss of inflation
No.3) Compound Effect If i give two options to you first: I will give 1 corer to you or second i will give 1 rupee now which will continuously get double till 29 days Now which option you will choose out of these two Well if you know the Power of compounding then for sure you will choose second option(1 rupee) because that 1 rupee will get 2 rupee in day 2 and in 10th day it will become 512 rupees and in 20th day it will be 5,24,288 rupees But in 25th day it will be 1,67,77,216 rupees and in 30th day it would be 53,68,70,912 rupees This is the power of Compound Effect many people tells it an Eight wonder of the world now an important thing is Compounding power is also used in Mutual Funds means if you invest in mutual funds then you can get the benefits of compounding so because of these reasons and coz of other reasons you can say that yes Investing is mutual funds in right which mutual funds will be right for you, its best if you decide by yourself by keeping your financial needs and status in mind now one more important thing Tony Robbins has written a book on this topic named “Unshakeable”
he has written that book by interviewing worlds best investors of the world and had learnt from them in that book he and other great investors Recommends that for us Index funds are the best option Even Warren Buffet Recommends to Invest in Index Funds Why? Because these are Passively Managed Funds and charges of it are very less Example: In it you get till 0.1 percent expensive ratio option which can be good for long run and here human involvement is less hence chances of human errors are very less as you know that no matter how intelligent man becomes, it is very difficult to predict the market hence if don’t choose any specific companies and invest only in Market then results can be better many times if you see a 100 years graph of stock market, then you will notice that ups and downs in stock market is obvious but in long term market slowly and gradually goes up and will go up only hence if you invest in index funds and mutual funds like an Intelligent Investors then in long term you will get profit from it ,
just need to have patience i remember that i had learned about this very before that we should invest little bit in stock market always but still i never used to invest in mutual funds and index funds because i used to find creating demat accounts and other paper works very complicated but recently i came to know about a company name “GROW” After which i have used that App and Surprisingly i liked that app, i find it cool with the help of it i easily bought mutual funds and index funds just by putting my pan and adhaar details means there wasn’t any need of account or paper works and the best thing about it was GROW IS FREE Means they don’t take commission to buy or sell funds This was another reason why i never invested in mutual funds before because i have read somewhere like these middle-man’s charges a hell lot of commission because of which we can’t see any profit but i didn’t face that problem with Grow
