What is Mutual funds | Mutual Fund for Beginners in Hindi - YouTube

Hello friends, today we will talk about what is a mutual fund.

How much only we can see on TV that mutual funds are correct.

Still there is fear in my mind.

What If I make a loss, are they showing the truth in the ads?

Many doubts are there, why this happens?

because many of us are not aware of mutual funds, and how it works.

The biggest fear in People has that if I make a loss in mutual funds,

if I lose my money, and our films have made this stock market Infamous.

So here I tell you, there are probably 300, 400, 500 schemes in the market

if you pick the worst scheme

you got a very bad advisor and he told you the worst scheme

99% chance that if you stay invested for more than 7-8 years,

then your return will be more than FD.

You will get a 9%-10% return, even if you select the worst scheme in this market.

That's why there is nothing to fear

and it's almost impossible, that you will lose in the long run.

But if you have selected a good scheme, then your Returns can be as high as 22-23%.

That means, your average return can be between 10% worst case

20%-22% in best case

Which is much better than gold, property, or any other asset class.

That's why you cannot afford to avoid Mutual Funds, because of this return potential.

Investing in mutual funds is very important

you will get better returns.

So now, as your fear is gone

let's talk about, what's mutual funds concept

how it works? and with that

how can you invest in funds? and, as a bonus

In the end, I will tell you about two such funds, which I personally like very much.

So I will tell you all this and much more in this video.

Hello friends, I'm Pranjal Kamra

let's start with Finology.

Today's video is design for beginners

who wants to know all the basic things, about mutual funds.

First, let's talk about, what is mutual funds?

Many people think, that mutual funds are the only way of investing in the share market.

But with mutual funds, you can invest in gold,

if you want, you can invest in real estate,

you can invest in debt funds, or if, as you know

you can invest in share market or equity.

You can invest in all four through mutual funds.

But mostly when it comes to the risk and return of mutual funds

The risk is high, can be a little volatile, but returns are high.

maybe it can go a little up and down, all of this is of equities context.

This means the money, that mutual funds invest In the share market, in that context.

To understand the mutual fund properly, the important thing is

to know the share market, what're the basics of the share market.

Before going further in this video, I would recommend you

to watch this video in which I have told the basics of the share market

so your share markets concepts will be cleared.

Now, there are three ways to invest in the share market.

First, research yourself, what shares are good and what are bad.

and pick your shares for yourself.

The advantage is, that you are not dependent on anyone

you're not paying any fees to anyone.

Disadvantage is that it's time taking.

It takes time to find good shares and undervalued shares.

You don't have the knowledge to do that

and it takes time to get the knowledge.

The second is, that you take the help of a research analyst or an investment advisor

to take help of an expert.

The advantage here is, you don't have to give time, just dependent on them.

The disadvantage is, you have to make regular transactions

an advisor can tell you buy this share, don't buy this

They will take their fees, but you have to do that buying and selling, regularly.

Third way is mutual funds.

through a mutual fund, you can also invest money in the share market.

Where you don't have to track regularly,

fees are low, you don't need to have stock-picking knowledge

You just have to select a good fund.

Now you know the basic purpose of a mutual funds,

that purpose is, as for equity funds

to give you exposure to the share market and to invest in the share market.

Now, let's find out how it works.

See, if you want to invest Rs-20,000

and you want to invest yourself or through an advisor.

Advisor has told you, you can invest in MRF, Page Industries or Eicher Motors shares.

So that one share is above Rs-20,000,

and you only can spend Rs-20,000

so you can't but it, and that's a big problem

by going direct or through a advisor.

But, what a mutual fund does is, takes Rs-500 from you

and Rs-500 from someone else, like that it will take Rs-500 from 100 other people

now it has Rs-50,000, and bought 2 shares of Page Industries.

So, if you were alone and invested Rs-500

then you couldn't have bought Page Industries shares.

Now, as there are 100 of you, so together you bought 2 shares of Page Industries.

Now, people are 100, but shares 2, so how will thay be divided?

So Instead, mutual funds buys 2 shares

and gives you mutual funds units.

So think, 2 shares were baught, Rs-25,000 each

so total of Rs-50,000 is invested

100 people have invested, so the mutual fund will give you 500 units.

So all of you have collectively become holders of those 2 shares.

So mutual funds allow you to invest in more companies for less money

which you cannot do by direct investing.

Now, how mutual funds dose this?

They build a fund management company, called AMC.

That company launches funds and asks people for money

like, we have launched multicap fund

and will do all kinds of medium and small investing.

We have this expert, who will manage your money

This is their track record. We assure you that

we will give you good returns, so come and give us your money.

So, people like you like me, who will be interested

some Rs-500, some Rs-1000, Rs-10,000, Rs-20,000, Rs-50,000

will give that AMC, Asset Management Company for fund.

Like that, all the gathered money will be called AUM, which is Asset Under Management, total money.

So suppose that this time Rs-2000 were taken

and 50 people were there, now Rs-1,00,000 have come.

Now, that AMC will apoint a funds manager

whos an expert in picking shares.

Now, he will make a strategie, for where to invest this Rs-1,00,000,

Rs-20,000 in one share, Rs-5000 in another

and will invest that Rs-1,00,000 in share maket.

and will give you that mutual funds schemes units.

Which you can sell anytime, money will be sent to your account in 2 days.

So this is the basic concept of the mutual fund.

Mutual means shared,

like sometimes we say at shared rooms at hostels.

A mutual fund is such a fund, where everyone's money is shared and a pool is being made.

And, they are buying shares with that pool money.

it's the simple concept of mutual funds.

Now, let's see the advantages and disadvantages.

The first advantage is more diversification in little money.

If you want to spend Rs-2000-4000, then you cannot buy many shares.

But in mutual funds, where everyone's money is pulled,

and is invested in many companies, so your Rs-2000 can be invested in many companies,

which you cannot do directly.

With little money, you'll get more company exposure and get more diversification.

An expert in managing your money

so if you tell an expert yourself to invest Rs-2000 for you

then the expert will say, you have only Rs-2000,

my fees are more than Rs-2000, so how can I give you advice.

But in mutual funds, where thousands of people like you come together and pay his fees

then you get the expertise of a fund manager at a very cheap price.

And, the cheap price, is called Expence Ratio.

What happens is, if you are investing Rs-100 in mutual funds

so for that Rs-100 roughly, it depends on th scheme

Rs-98 to Rs-99 is spent on that scheme

and the company takes Rs-1 or Rs-2, for the experts salary

This is called Expence Ratio.

The lesser the expense ratio, the better

which shows that your fund manager is charging the least fees.

Third, you invested money once, then mutual funds will keep on buying and selling shares.

So you do not need to do transactions again and again.

So you can live your life comfortably, without thinking that

which share to buy and which one to sell.

Fourth, you must have heard about SIP.

Once you set the mandate in the bank

that every month, from your account Rs-1000, Rs-2000, Rs-5000, as much you want,

Keep deducting it and keep investing in the scheme.

that every month, you do not have to do anything manually

you have put the SIP, it keeps investing what you save in salary and automatically will be deducted from the bank.

You can stop SIP whenever you want and can decrease or increase it whenever you want

It's all at no charge. Absolutely flexible.

Think that, If the SIP is running but there is no money in the account

so the SIP will be bounced.

many people fear it, but there is nothing to fear

it's not like check bounce, Rs-5 to Rs-10 are takes as bank mandate charge,

no other loss is there.

So until now, I have told all the good things about mutual funds.

So, is mutual funds the best and there's no flaw.

It doesn't happen with anything and it's my duty to

tell you the disadvantages and wrong things.

First is, the greed of that mutual fund company.

many mutual fund companies are there, that want to more and more money to come to their schemes

They will do a lot of marketing, hire more people and just wants a lot of money.

Because of the amount invested in that company, the company will earn 1%-2% of it.

So performance is good or bad, that doesn't directly affect them,

how much money is coming and how many people are investing

they will earn 1%-2% of it.

So sometimes the simple focus of some companies are just marketing money

not managing it.

Second, and this is a big flaw.

It's not in the hand of the mutual fund's manager, when to invest in shares and when to take them out

it's in your hands. If you give them money, they will invest.

If you want redemption, saying you don't want to continue, give my money back.

Then mutual funds manager have to sell the shares and give your money back.

So sometimes happens, when the market crashes

and all the share prices are down and the shares are available cheaply.

So the fund manager who is an export wants to invest in these cheap prices.

But normal people panic, that the market is crashing and I have to get out

so they apply for redemption and take back their funds.

The fund manager, in compulsion, has to sell those shares, which he invested at a loss

and give you your money back.

Where he wants to make more money

so he can buy cheaply,

but nothing happens by him saying or not saying.

If the common man, at large would want to get out of mutual funds

then the fund's manager had to sell the shares and give you your money back

so you and that fund will both make a loss.

Third, everything, the entire funds performance

depends on the funds manager and research team.

So sometimes, the research team wants to save their jobs

they don't buy such stocks, which can give more return but is risky

they don't want to take risks.

so many fund managers, to save their jobs and reputation

only invests in well discovered and well-known stocks

so return are not as high and as you expected, the scheme underperforms.

If the fund's manager wants and has got a good idea

in small or large cap catagory, even then he cannot invest

because the schemes mandate and directions are restricted for mid caps.

For this reason the performence sometimes suffer.

This does not happen when you personally invested,

any stocks you like, big or small companies, you can invest.

In mutual funds, sometimes mandates are restricted.

Now let's talk about the biggest use of mutual funds.

Mutual funds should be used for your goal planning.

Like, if you want to get your kids married, after 15 years,

you need their education funds after 10 years,

if your retirement is in 20 years,

so you can select mutual funds, according to these.

Let's start with months, what month is now? June,

so June and July are usually college admission times.

Your tension here now is fees money

if you start from today, and select one fund for kids education

and each month, as you expected it

if you expect you need Rs-15 lakhs, after 10 years,

and from today, you start SIP in one fund.

So you get the exprected amount after 15 years.

You can make one fund for kids education,

one fund for marrage,

one fund for your retiement.

And besides that, you can take a fourth high-risk fund

if you want to go on a holiday, or have a foreign location dream

This fund should be high risk, because

it's luxuary, not compulsion

if you cannot go, then your life won't be ruined.

So for this, take a fund that is a little risky

it can happen that you make a lot of money and go on a nice vacation,

or you make a little less money because it was a high-risk fund so you didn't get good returns,

made some losses and went on a domestic vacation.

But this is such a goal, where you can take a little risk.

You can't take a risk on a kid's education, should be a safe fund

can't take a risk on kids marriage, should be safe fund

for vacation, you can teke it.

So in this case, it's for an example, not investment advice.

According to me, if your planning this

then you can take two large-cap funds, and one mid or multi-cap fund for vacation.

So like this, you can design your portfolio, according to your goal.

I say it again, this goal planning is just for example.

Your exact goal planning

on you need, how much money you want, after how many years

how important is that money, depents on all that factors.

Despite that, how many dependents are there? Is there any other earning member?

Are the number of dependents gonna increase? There are many factors.

So you have to make a good portfolio, according to these factors.

And, if you want us to make this portfolio professionally

where our experts, will analyze your risk profile and needs

for you not only mutual funds

but also will do insurace, retirement and will do tax-planning

so you can subscribe to our Masterplan.

Which is Finologie's financial plan service.

You'll get the service link in the above card and in the video's description.

Or, if you just want to select mutual funds, with our help

you can choose Super Funds. Where we

will make a portfolio, according to your mutual fund's needs.

So this service link is in the above card and in the video's description.

Now, this videos bonus content.

As I said at this video's end, two funds, which I like.

So first, with comparatively low risk, the inequity category

it's called Quantam Long Term Fund.

And Second, a little risky Parag Parikh Long Term Equity Fund.

Which is a multi cap fund.

Besides that, to know what funds I like this year

you can check this video, where I mentioned five good funds for 2019.

Hope that you cleared you basics about mutual funds, with this video

if yes, then don't forget to like this video.

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So I will be bringing more such videos

Until then, this is Pranjal Kamra

Signing off, Bye Bye.