How to invest INR 10,000 per month in a mutual fund? #MutualFunds #InvestmentTips

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that is the reason why people say that hey don't try to time the market even if markets are high continue with your sips they right about that but this is a tip that can save you a lot of money hi everyone welcome to today's video today we are going to understand something which is very very fundamental and important as to how you should be investing in mutual funds I'm not going to complicate anything I'm going to give a super simple explanation in six points as to how how you should go about analyzing which mutual funds to invest in what are some of the key things that you should remember how you should sell your mutual funds this is the simple agenda for today I would like to thank ticker tape for being the knowledge partner on this video very quick disclaimer I myself use ticker tape therefore I advocate the product whatever knowledge Partners I would bring on this channel I would have personally used their products that is my promise to you with that said let's get this video started so let us start with the first point which is the basics of mutual fund I'm going to give you a very simple explanation of what are some of the basics that you need to keep in mind regarding mutual fund Investments first and foremost what is a mutual fund if you have to analyze what mutual funds are how would you define a mutual fund so essentially what happens is this that so when you go on zerodha or any trading platform you go and buy stocks right you are buying stocks of ITC you are buying stocks of HDFC Bank Etc now if this is bucketed right if all these buckets are created and if four or five stocks are lumped together in a bucket then that essentially becomes a mutual fund that is a very simple definition that I'm giving you that individual stocks you just literally go on Zera you go and yourself buy those stocks I for example invest almost all my money through direct Equity investing direct Equity investing means that I'm directly going and buying stocks that is direct Equity investing on the flip side mutual funds are what they are collection of stocks you have created a bucket of stocks and that becomes a mutual fund right that is a simple definition that is the first key concept on Basics that you need to remember second Point what you need to know that once this bucket is created someone needs to manage it right so these are called as mutual fund managers there are big big people big big companies that have these big mutual funds for example mtila wall runs like 10 different types of mutual fund they will hire one mutual fund manager to manage that particular mutual fund similarly other companies like HDFC AMC would be running a bunch of mutual funds right they will assign a mutual fund manager to manage that mutual fund now what does a mutual fund manager do he buys and sells stocks out of this portfolio or bucket that he or she has created simple with me so far okay so now the mutual fund manager comes he creates a bucket of different stocks that he is looking at for example let's look at can rob Blue Chip Equity Fund right now the name itself indicates certain certain things for example this is equity Equity means stocks for example what is other thing other thing is Bond right it could be a debt or bond-based mutual fund also so the name itself indicates a lot of things right so this is how you deafer a name that hey this is equity these are mostly investing in Blue Chip companies and it's run by can most likely caner Bank okay next thing you see this 41.88 right now what does this 41.88 means it means this is called as nav net asset value what is the asset here the asset is this basket right what we were talking about now this basket would have bunch of different stocks how can you check what stocks does this particular basket has so you have to go to portfolio and look at what specific stocks does this company have so it's investing currently so let me clear this out so it's investing currently in these sectors so it's investing 20.73% in private Banks it's investing in IT services it's investing in all these different different sectors you can scroll further and figure out what specific private Banks they have invested in so they have invested in HDFC Bank infosis ICI is a bank infosis is a tech firm Reliance Industries and bunch of different things right so this is the basket of mutual fund that has been created and they have named it what and they have named can rob Blue Chip Equity Funds because they are mostly investing in Blue Chip companies they are investing in equity not in debt okay so debt mutual funds are different so I hope these Basics are clear that what is nav nav represents essentially that weight times whatever The Price is Right so weight times the price right and if you keep doing it for all the stocks that are there right and divide it will give you a specific value this is the weighted average of the portfolio it represents a very specific number right this indicates the average price which is 41.88 of this entire portfolio that is called as NE right so for example if I want to invest in this particular mutual fund right now today then I have to pay how much money I have to pay 41.88 rupee to buy one share no one unit right one unit of this mutual fund right that is what unit buying is now if I have to exit then how much money will I be making today I'll be making 41.88 right whether I'm entering or whether I'm exiting I'll have to do it at today's price which is 41.88 right this becomes the nav so nav is literally like a price for example let me just finally close out this point for example let's say that if ITC is trading at 210 that is the stock price right stock price right but if you're looking at nav every mutual fund will have an nav the nav here is 41. 88 right so this is this becomes like a stock price right analogous to stock price this is the unit price of this mutual fund right so you're trading at this whether you are buying or selling so hopefully the concept of nav is clear now let me start walking you through some of the key things that you need to remember now now when you're buying a mutual fund now this mutual fund can be active type or passive type okay so active type what does active type mean and what are some of the advantages disadvantages let me quickly discuss right very very important for you to note please watch this video till the end because you end up doing sips and you understand how the things and do it please understand all these important points because this is going to impact your financial health for the next 35 40 Years of your life at least so please listen to this right so active mutual funds are something that is being actively managed right actively managed by whom right the mutual fund manager that we were talking about earlier so that person actually sits in his or her office they have a team and they actively trade right they actively trade these mutual funds right on literally almost everyday basis they would buy some stocks they will sell some stocks etc etc that is called as trading so these funds are actively managed now in general again I'm highlighting the word in general in general actively managed funds have the following problems number one they charge higher commissions right the commissions are high why are higher commissions because you know you have a mutual fund manager he will put on a ceiling fan AC office staff they have to pay them so there are higher commissions to with right usually these commissions are charged on ongoing basis that every year some amount of money that you're paying the mutual fund will be taken out as commission or there is something called as entry load or exit load right so entry load means that you are paying money to enter into that mutual fund when you're buying this or when you're selling or when you're trying to get out of that mutual fund you will have to pay some penalty right so commissions are charged and these are higher for actively managed mutual funds and trust me even small commissions can end up eating a lot of your money over the long term so be very very wary about it that's one second you might say that hey akhat what about the returns because if there is a mutual fund manager who is actively trading the stocks he or she might be making more returns so I'm getting more benefits out of it is that true the short answer is no right on an average if you look at Blue Chip large cap right so large cap mutual fund then on an average majority of the mutual funds more than 50% have given less than 10% return over a 20e period okay that is the historic return now let us compare this return to passive funds now what are passive funds now passive mutual funds are nifty50 funds right or sensex funds right sensex funds right now essentially what happens here is that here there is a mutual fund manager yes right it's not as if that the mutual fund manager would go away on passive funds there is a mutual fund manager but essentially what here she is trying to do is that they are trying to mirror the market right for example if a new stock is added into Nifty 5050 nifty 50 is the market that indicates India's stock market similarly sensex indicates it's a market indicator so it indicates the entire portfolio of those stocks that come in sensex right now this particular mutual fund manager is going to mirror this whatever is happening in the Nifty now if Nifty weight has gone up because TCS increased in value then this mutual fund manager is going to mirror the market essentially he will go and buy more TCS stock right similarly if Reliance industry valuation has come come down then accordingly the mutual fund manager will optimize the portfolio essentially the mutual fund manager is simply mirroring the index right these are called as passive funds they have number one lower commissions right lower commissions why because mutual fund manager does not have to do a lot of research right they do not have to hire a ton of people to mirror this Index this can be done by literally one person okay very easy even you and I can do it so this is not super complex from that angle that's one second thing is that the returns right would it be higher in passive or active do give a comment I would love to read it and love to read your rational but let me disclose the answer that on an average how much were the active mutual funds giving they were giving roughly 10% or less than 10% large cap Equity mutual funds over a 20-year period now passive index funds have given approximately 12.1 to 12.4% returns over a 20e window in India right for the last 20 years now this is the difference between active and passive so you decide where you want to invest so we have covered the basics this was a slightly longer point but I wanted you to understand the concept of mutual funds in a systematic easy to understand this now we have understood the basics of mutual fund let's move on to point two now let me ask you that how would you go and invest which mutual funds to pick you will say that you know what passive fund I'll invest a little bit of money but I an active guy I would want to invest in active mutual funds so I would go on the internet I will type out best mutual funds to invest and I will get an article like this for example I'll get articles like these right can REO Blue Chip Equity direct fund this is good kch Blue Chip fund right blah blah blah right so there are like these four five funds right best performing large cap funds right so you will have all these four five companies now I'm not saying that these mutual funds are bad right but what you're trying to do is that you're trying to apply a concept you're saying that a past returns equals to Future returns right this is not like buying items on Amazon right okay if you have gone and buy bought this pen on Amazon and if it has four and a half rating it means it is good it has been used by a lot of customers it's great right so you can go and buy product but if you start buying mutual funds like that looking at the rating and pass returns it need not correlate to your future returns stock market is a Futures game not a past game let me give you another example just because Bajaj Finance has grown at hypothetically speaking 25% per year it does not mean that it will continue to grow for the next 5 years at a rate of 25% so please understand that the past historic performance of a mutual fund does not at all correlate with how it's going to do in the future right please keep that in mind but what type of analysis do you want to do if you want to invest in actively managed mutual fund and this is the reason why I like tick a tape that you get certain data for example you can look at the expense ratio I was talking about expense ratio in step one that how much commissions you paying out in terms of expense ratio so the expense ratio for this particular mutual fund is good right it's low therefore it's fine right you also need to check it with the FD rates because some mutual funds have done so poorly so poorly in the past that they have even put fds to shame so please don't invest in those kind of mutual funds so it's good to check this number also and please check some kind of red flags for example let's say if there is some some group I'll not name it let's call it this group X now if that group X is running 10 mutual funds and that group X itself goes bankrupt then those mutual funds will also have credit crunch issues those mutual funds will also have liquidity issues right so please keep in mind these red flags also and ticker tape is quite good from doing this very quick analysis now before you start doing 10,000 rup sip it's a good idea to just take a very quick look what is happening with your mutual fund because one of the biggest biggest problem with mutual fund industry is that you just do sips right you will go systematic investment plan every first of month you will take out 10,000 rupees and you will pour it into a mutual fund and you do not even know what is happening with that mutual fund right so please keep an eye out so ticker tape is very good for doing that quick computation and quick analysis now this brings us to third point which is equity versus debt allocation of mutual fund right so let me quickly explain what Equity mutual fund means right so you see here this is an equity mutual fund right Canada raw Blue Chip Equity Fund I'll make this fund famous today so Equity mutual funds are basically investing in stocks right now there are debt mutual funds also so let me show you an example of debt mutual fund so if you go here and you type out debt mutual fund right so you will see a bunch of debt mutual funds right HSBC debt fund now this is a debt fund right this is not an Equity Fund right this is a debt fund it says debt so these are debt funds what are debt so what is the difference between equity and debt Equity literally means that you are if you are investing in a company let's say ITC right and you are buying let's say out of 100 stocks you buying one stock so you become one% owner of ITC right so Mr ra junal actually does that right so he actually owns companies right literally owns companies similarly Warren buff owns companies so they are owning like 1% 5% 10% of companies similarly when we buy let's say one stock out of 150,000 stocks then we also become part owner of that company this is called as Equity investing and when you invest in equity mutual funds you are becoming part owner of the company what does debt mutual fund means that you are buying debt debt means loan right now if ITC is taking on debt right they are borrowing right you are essentially investing in a fund that is giving loans to ITC right that is what debt mutual fund means now what is the difference so two differences number one Equity mutual funds are slightly more risky right why because if a company goes bankrupt then the equity investors are paid last right when the assets are liquidated so imagine that if ITC has to sell its asset because of bankruptcy then Equity owners will get paid last therefore risk is very high but Bond holders or debt holders are paid first right whenever any kind of liquidation happens therefore debt mutual funds are less risky right risk is less second difference returns right on an average the return for debt mutual funds debt mutual funds is going to be low compared to equity mutual funds why because risk is lower in debt mutual funds therefore returns will also be lower now to understand how much money do you need to invest in debt versus Equity let's move on to the next point which is point number four that in order to understand how much to invest in debt versus Equity mutual funds you need to understand what is your age and investment Horizon right plus what is your risk appetite right so these are very fancy words so let me simplify these so for example if you are a type of an investor who will say that he you know what we want to make 5 100% return you are in the wrong game go invest in cryptocurrencies or some evolving asset you're not going to make money by investing in large cap blue chip type of mutual funds not going to happen right so you need to understand your risk appetite the more risk you take the higher your supposed returns are or should be right that's a very important Point second thing you need to understand the age because this is a very important concept so let me give you an example so let's say that you have 10,000 rupees right and you're 30 years old now you are at least going to invest for 40 years right it's okay that hey if the market is going up like this great your money is growing if it crashes the way it crashed in 2020 Corona virus where Market corrected by 40 50% then you can hold on your investment right you don't need to withdraw money right so because you have a long investment Horizon right therefore in the early part of your life you should go Equity you should invest as much as money possible in the equity mutual funds right what type of equity we will talk about it on the next point but understand that you need to decide your own risk level and adjust your portfolio accordingly but invest mostly in equity right that is what I would advise for example I'm 33 I'm investing almost 99% of my money in equities not no debt whatsoever right but this don't follow my lead here blindly I would generally advise a rule that hey if you are like less than 30 then have like 70% equity and 30% debt in majority of the cases right so that gives you a more balanced perspective now you might say that why are you investing 99% because see you know my investment hor my risk cap is different my income streams are different so I can take that risk right so therefore I'm investing more in equity because I'm looking after more growth right from that angle so my the type of investor I am that is completely different right so you don't need to become exactly like me right you don't need to copy my strategies from that angle a more balanced perspective is that hey 70% Equity 30% debt right as you grow older you need to change this mix right of 10,000 to what it should become 50/50 right by the time you hit like around 45 right that is what the mix should be right so now play along with this mix right whatever makes you feel comfortable But please understand where your money is going is it going to debt is it going to equity now comes fifth point that hey where and exactly which mutual fund should I invest in and how should I invest in should I do sip should I do lumsum right okay so let me first and foremost cover where should you invest so my personal advice is that if you are a average investor right if you're a balanced investor what you should do is that you should prefer taking large cap mutual funds that invest in Blue Chip companies right or go and invest in passive funds like nifty 50 right please write it down this is a very very important concept this is a very very important point you don't need to get fancy with your mutual fund Investments right because when your mutual fund manager or mutual fund company calls you they will show you that hey you know what our mutual fund in the past has given 50% return 60% return 70% return you will go Rich you know this is like literally they are killing Bitcoins also so why don't you come and invest with us no don't do all that foolishness right keep it simple you are making long-term Investments here you should be happy with a 12 to 15% return if you getting that very happy you will be super rich right I have talked about 15 15 15 rule that you invest 15,000 for 15 years at a rate of 15% return you will become you will make one CR right so follow that advice right don't try to get rich super fast it's not going to work out literally pick these type of mutual funds that is my simplest advice to you you can go with any company usually go with a company that has AUM asset under management which are high for example companies like cotech companies like HDFC Bank have very high a asset under management right that they're bucket their portfolio is very very big like 10,000 cres 20,000 crores whatnot right so go with companies that have very high AUM right that's the simple piece of advice don't do anything fancy here now you would say up that hey in the past you have recommended some sectoral funds right yes I have done that but you don't play around with that with only 10,000 in capital if you have little bit less Capital then try to be a balanced investor if you're making more money if let's say that your investment amount is let's say 1 lakh per month right on mutual funds then it's fine take out like 20% money invest in like EV sector focused mutual funds there are sectoral mutual funds as well for example there are funds like housing right energy Etc so you can go and buy those mutual funds for example let me show it to you for example take a look at HDFC Housing Opportunity fund right if you go and analyze the portfolio of this company you will start seeing companies which deal in housing somehow for example HDFC gives home loan Larson and tuo is a infrastructure development company ICI gives Home Loans SBI gives home loan HDFC is Housing Finance Housing Development Finance Company Etc Ashoka buildon so these are sectoral funds right do get into sectoral funds only and only if you have a little bit of higher capital on the side 1 lakh 20% allocated to some kind of sectors that you are bullish about so that is fine right so that is how you make sectoral investments now second topic that I want to quickly cover is should you do sips sips or should you do investment lumsum right for example lumsum means that Market is going like this you invested 10 lakhs in mutual funds here and then Market crashed right so it becomes a problem for you then you have to wait for the market to come back right then you'll feel happy here and then eventually it will rise up then you'll feel super happy but the point is that the reason why people should be investing in mutual funds is to do dollar cost averaging this is an American concept therefore dollar cost averaging what it essentially means that you literally ride the wave right so every first of the month or 15th of the month whichever date you pick you keep investing 10,000 right you invest here next month you invest here next month you invest here next month you invest here next month you invest here next next month you invest here so on and so forth now you'll say that except you know what this looks Madness why you would do it so let me prove it to you right so let me show you nifty 50 okay so let's say that you bought a nifty 50 mutual fund so it will behave exactly like Nifty right so let's look at this right so let me look at now see if you would have made Investments for the last so many years what can you see right so let's say that all these Red Dot indicates that you're making investments in a in an interval fashion that you are periodically making Investments now you can see that you know what sometimes it went up then it came down all my investments then I made investment here also so every Red Dot indicates that you're investing 10,000 rupees right so it's going up and down right sometimes the market is up sometimes the market is down right now Market is super high right so don't discontinue doing your sips you should do it not a problem in general what can observe type it out in the comment box right so in general you can definitely observe that hey if you draw a trend line right it is still going up right so essentially what you're doing is that you are literally like from a averaging concept it has gone up right in general you know for a fact that in the long term the markets will follow this trend line and it will keep going up and up and up right that is the reason why people say that hey don't try to time the market even if markets are high continue with your sips they right about that but this is a tip that can save you a lot of money and I really hope that you press the like button because of this so that tip is this right that please don't do your sip on first because mutual fund managers know it they plan it accordingly do it on 15 or do it on some odd date right 22nd whatever that date is right why because the entire world is doing their sip on first right and it has been proven by several researchers that in a last 20 years if you would have done your sip on the first you would there would have been a massive difference between the returns that you have made by investing money on first Visa Vis on 22nd 23rd of that particular month right so very important concept for you to note that if you're planning to do sips do it on 22nd 23rd any odd date don't do it in the first week of the month very important please hit the like button so far we have understood what on mutual funds whether you should do debt mutual funds Equity mutual fund whether you should do active mutual funds passive mutual funds should you do sips which date you should be doing sips and how continuously you should be investing so these are basic concepts that you have understood so far now I'll make a separate video if you want on when to sell the mutual fund but I'll just in the closing of this video I'll still take you through this concept now number one reason to sell your mutual fund is that if your mutual fund is performing badly get out of it probably it has a very bad mutual fund manager how do you judge whether the mutual fund is doing badly so compare it to Nifty returns right Nifty returns right now if the Nifty is giving you let's say 12% in a year and your mutual fund is giving only 6% bad right you should get out right if the Nifty is giving 12% and if your mutual fund is doing 10% it's still an acceptable range right that's still okay number two reason to get out of mutual fund is that if you have achieved a certain goal for example you started investing in mutual funds because you wanted to buy a car now that goal has been achieved good right you can withdraw money from mutual fund it's completely okay right ideally you should follow something called a systematic withdrawal plan right so you talked about sip right sip means that you're investing in the mutual fund Market every single month now why do we do sip so as to get benefits of the averaging right similarly systematic withdrawal plan indicates that you're withdrawing money again in a timely manner every month you're withdrawing money bid by bid right so every month you withdrawing 15,000 20,000 whatever that amount you have decided again this will give you averaging benefit it will not leave you in the Lurch right it will not happen that you know what okay share market Ted and you would R your money so you're booking a loss in a way so that stuff should not happen so I hope that you found this video to be useful we covered a lot of Concepts so if you have doubts please comment I'll personally read those comments and try to respond and please give it a thumbs up that would mean a lot to me and I will see you on the next video [Music]
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Channel: Akshat Shrivastava
Views: 372,542
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Keywords: akshat shrivastava, cases over coffee, NAV, mutual fund, SIP, HDFC AMC, Bajaj Finance, Motilal Oswal, Tickertape, Zerodha, Debt mutual funds, Canara Rob Bluechip Mutual Fund, Kotak Bluechip Mutual fund, stock market, investing, systematic investment, investment for beginners, ICICI Bank, Larsen and Toubro, HDFC Bank
Id: HixoHQPLFSs
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Length: 26min 25sec (1585 seconds)
Published: Fri Jul 09 2021
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