Intro to mutual fund SIP questions and concerns
00:00
The speaker addresses common confusions and questions about mutual funds, such as fees, withdrawals, choosing the right fund, and expected returns. They emphasize clarifying these doubts based on viewer comments. The speaker also shares advice from a savvy individual who invests in mutual funds only when the market is rising and stops investing when the market declines, claiming this strategy guarantees profit without loss, though the speaker advises against following this approach.
01:10
Mutual fund benefits and diversification explained
01:10
The speaker explains the benefits of regularly SIP (Systematic Investment Plan) investing in mutual funds, especially during a falling market, emphasizing averaging to gain more profit. He uses an analogy of a house with three brothers—an engineer, a doctor, and a lawyer—living together with mutual support. Even if one brother loses his job, the others financially back him up, ensuring no hardship. This mutual support and diversification represent how mutual funds work, where the risk is shared and balanced across investments, providing financial stability and protection.
03:11
How mutual funds invest in multiple companies
03:11
The speaker explains how mutual funds work by pooling money from investors and investing it across various companies. For example, if you invest ₹5000 monthly, that amount is distributed among multiple companies by experts managing the mutual fund. The speaker highlights that your money is invested in shares of diverse companies like Britannia, Infosys, MRF, D-Mart, and Asian Paints, which operate in different sectors such as FMCG, IT, and retail. They also promise to explain later how to choose the right mutual fund and answer related questions.
Diversification protects investments across sectors
04:15
The speaker explains that investing in individual stocks carries risk because if one sector, like IT, underperforms, your investment suffers. For example, if Infosys stock falls, your money invested there also falls. Therefore, if you lack deep knowledge, it's better to invest in mutual funds, which offer diversification across sectors and reduce risk.
05:18
Mutual funds invest in different categories of companies, ensuring diversification to protect your investment. Fund managers are experts who carefully diversify the portfolio to minimize losses. If one stock or sector performs poorly, gains from other investments offset the loss, making mutual funds a safer option for investors with limited knowledge.
06:33
Terminology: large cap, mid cap, small cap explained
06:33
The speaker explains the three common terminologies in mutual funds: large-cap, mid-cap, and small-cap companies. Large-cap companies are big, financially strong firms with lower risk, while mid-cap and small-cap companies are medium and small-sized firms respectively, with higher risks. He advises that investing in large-cap mutual funds is generally safer since large companies rarely go bankrupt, though their returns might not be extremely high.
08:25
The speaker contrasts the risk and returns of small-cap and large-cap investments. Small-cap funds can yield very high returns, sometimes up to 100% in a year, but they also carry the risk of significant losses. Large-cap funds offer relatively safer investments with moderate returns. He recommends small-cap funds only for those who understand the companies well. For beginners or less experienced investors, large-cap funds are safer and provide good returns. The speaker promises to demonstrate these points with live examples and screenshots.
09:51
SIP vs lump sum investment explained
09:51
The speaker explains the difference between SIP (Systematic Investment Plan) and lump sum investments in mutual funds. SIP involves investing small amounts regularly, like ₹2000 or ₹5000 monthly, while lump sum means investing a large amount at once. The discussion highlights how people often wonder which method is better.
10:49
The speaker discusses the risks of lump sum investing, especially in the stock market. Using a 2018 example, investing ₹10 lakh at once could lead to losses if the market falls, unlike SIP, where investment happens gradually. The stock market is unpredictable, and capital can decrease instead of earning interest.
11:33
The stock market's ups and downs are compared to the ups and downs in human life. The speaker emphasizes that the market's fluctuations offer valuable life lessons beyond just financial ones. They invite viewers to request a detailed session on how the stock market's behavior parallels life experiences.
12:37
The speaker advises not to panic during bad times but to work hard so that better times will come. They stress the importance of perseverance and mental strength, noting that good and bad phases alternate. Continuous effort and resilience ensure that good times will eventually return.
13:10
Using an example of investing in Titan shares in 2010, the speaker illustrates the power of long-term investment with an annual return of 32%. A ₹1 lakh investment grows to ₹37 lakh in 13 years, highlighting the benefits of investing at market lows and holding through market highs for significant gains.
14:03
Identifying market bottom and investing timing tips
14:03
The speaker discusses the importance of identifying the right time to invest in the stock market, specifically when it is at a low point before rising again. They recommend gaining knowledge through books or audiobooks, highlighting a popular audiobook on avoiding losses in the stock market with over 300,000 listeners. The platform Kuku FM, which offers extensive Hindi audio content and a high user rating, is promoted along with a 50% discount coupon for first-time monthly subscriptions.
15:43
The speaker advises on investment strategies, emphasizing diversification by spreading investments across 10 different companies in various sectors rather than putting all money into one. They discuss the benefits of investing in individual stocks over mutual or index funds, but stress the importance of understanding the investments thoroughly before committing funds.
16:50
The discussion continues on lump sum versus systematic investment plans (SIPs), explaining that both have their place depending on the investor's situation. The speaker warns against investing in stocks at their peak prices, recommending the use of 52-week high and low data to identify appropriate entry points. They promise to demonstrate this with screenshots later.
18:04
The speaker clarifies that lump sum and SIP investments serve different purposes and should not be directly compared. Lump sum investing is suitable when a large amount of money is available at once, while SIPs allow smaller, regular investments. They also mention the availability of multiple brokers and that switching brokers is not an issue, reassuring listeners about the safety and flexibility of investment channels.
19:16
Concerns about broker failures are addressed, explaining that if a broker shuts down, investors' money remains safe as mutual fund companies hold the funds. The speaker highlights regulatory safeguards by SEBI, ensuring that even if a mutual fund company closes, assets are transferred to another, preventing loss. They also touch on minor risks in small-cap funds but assure that large-cap investments are generally safe.
20:34
Further reassurances about mutual fund safety are provided, emphasizing that investors' money is protected and transferred appropriately if a mutual fund company closes. The speaker encourages viewers to comment for more detailed explanations about risks in small-cap funds, while reinforcing the overall security of mutual fund investments.
21:36
The speaker explains that missing a monthly SIP installment due to insufficient funds does not result in penalties or affect credit scores. However, banks may charge small fees for failed auto-debit mandates, which vary by bank. They advise consulting with one's bank about such charges and reassure that the mutual fund company will manage missed payments without issue.
23:07
The speaker reassures listeners that even if SIP payments bounce multiple times, the mutual fund company may cancel the SIP but will not cause significant issues. They encourage contacting mutual fund customer care for assistance. Finally, they highlight the ease of redeeming mutual fund investments today and reassure that in case of the investor's passing, the funds will be safely transferred to their family.
23:52
Withdrawing money and taxation on mutual funds
23:52
The speaker explains taxation on mutual fund investments, clarifying that tax is only applied on the earnings, not the principal amount invested. If earnings exceed ₹1 lakh in a year, short-term gains (investments held for less than a year) attract a 15% tax, while long-term gains (held over a year) attract a 10% tax. Earnings below ₹1 lakh are exempt from tax, acknowledging the government's stance to not tax low earners heavily.
25:56
The speaker discusses market cycles, likening them to a bicycle with dips every 3-5 years. They recommend holding mutual funds for at least 10 years to maximize returns. Investing consistently, regardless of market downturns, is advised since mutual funds tend to yield good average returns over time. The importance of regular investment and not waiting for market highs or lows is emphasized.
27:06
Investors are encouraged to continue investing or redeeming mutual funds anytime, but for long-term gains, a minimum of 10 years is recommended. The speaker then introduces the comparison between mutual funds and index funds, noting that returns can be substantial but vary by fund type. Mid-cap and small-cap mutual funds can offer high returns but need careful selection and understanding.
28:41
The speaker advises that if an investor is risk-averse and prefers safety, index funds are preferable. For those willing to take moderate risk, mid-cap and small-cap mutual funds can be considered. Risk in mutual funds means small variations in returns rather than losing the entire investment. Higher risk can mean slightly higher returns but also higher variability.
29:42
The discussion continues on the suitability of index funds for low-risk investors and mid/small-cap funds for those open to moderate risk. The speaker highlights that large-cap mutual funds and index funds often provide similar returns. They also mention that investors can increase their funds gradually, emphasizing the benefit of growing the investment corpus to earn better returns over time.
30:58
The speaker demonstrates using the Angel One app to research mutual funds, showing search features and how to check fund returns. They highlight several large-cap funds offering around 25-28% returns over three years, which is significantly higher than commonly perceived averages. The speaker encourages careful study before investing in small-cap funds due to higher risks.
32:14
Examples of small-cap mutual funds yielding returns between 40-50% are presented, comparing these high returns favorably against traditional investments like property loans. The speaker stresses the importance of understanding the companies within the fund before investing, recommending research to mitigate risks associated with small-cap funds.
34:45
Details about a specific mutual fund managing ₹1444 crore are shared, noting low expense ratios and no exit load. The speaker explains tax implications when gains exceed ₹1 lakh annually. They then analyze the stock Britannia, examining its current and 52-week high/low prices to decide if it is a good entry point, advising to invest when prices are below the peak to maximize potential gains.
36:46
Investors are encouraged to buy shares when prices are low within a reasonable range to maximize returns. The speaker invites viewers to ask further questions in the comments and shares a coupon code for a discounted investment app subscription. They conclude by recommending mutual funds as a safe and rewarding investment compared to other options and express enjoyment from the session.
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