Here’s a post on Personal Finance 2.01 which makes a lot of sense to me
Investing in the equity market directly is exciting and glamorous. You are in the thick of things and are able to take responsibility for yourself. Though the volatility and the information overload makes it a daunting task. The present subprime quagmire makes it even more daunting.
How about investing through Mutual finds? Doesn’t it have its own loading and administrative charges and the fund managers making merry on your hard earned money? And can’t we see the best performing mutual funds and follow their portfolio? The performance of a scheme is reflected in its net asset value (NAV) which is disclosed on daily basis in case of open-ended schemes and on weekly basis in case of close-ended schemes. NAV of mutual funds are required to be published in newspapers.
Here are some points to ponder:
- We should allocate our time to investment decisions in proportion to our income generation goals.
- Convenience and hassle free investing should be a major factor.
- Fund managers are into it full time. If we able to identify fund managers who have consistently performed over last 3-5 years, nothing like it.
- The fund manager also has the muscle power of crores of Rupees and is able to take entry and exit decisions impartially.
- MFs continuosly churn their portfolio. When MFs buy and sell stocks, they don’t have to pay capital gains as you do when you churn.
- We are likely to panic over market crashes. MFs can take advantage of a crash!
- With Systematic Investment plans (SIP), you can start investing with as low as Rs 500 per month.
