A mutual fund is an investment vehicle, which pools money from investors with common investment objectives. It then invests their money in multiple assets, in accordance with the stated objective of the scheme. The investments are made by an asset management company or AMC.
WHY INVEST IN MUTUAL FUNDS?
In open-ended schemes, you can get your money back at any point in time at the prevailing NAV (Net Asset Value) from the Mutual Fund itself.
Mutual fund investments are highly liquid. Compare that with a fixed deposit or a bond which has a fixed investment duration.
While investing in mutual funds, you are spoilt for choice. You have a number of mutual fund schemes to choose from, which may invest in a whole range of industries and sectors, different kinds of assets, and so on. You can find a mutual fund that matches just about any investment strategy you select.
SEBI regulations for mutual funds have made the industry very transparent. You can track the investments that have been made on your behalf to know the sectors and stocks being invested in.
In addition to this, you get regular information on the value of your investment. Mutual funds are mandated to publish the details of their portfolio regularly.
LOW INVESTMENT THRESHOLD:
A mutual fund enables you to participate in a diversified portfolio for as little as Rs 5000, and sometimes even lesser. And with a no-load fund, you pay little or no sales charges to own them.
An equity investment generally refers to the buying and holding of shares of stock on a stock market by individuals and firms in anticipation of income from dividends and capital gains. Equity investors enjoy a part of ownership of the company and they are entitled to the company's assets/ dividends/right shares/ bonus shares.
Derivatives are Futures and Options contracts. They are called derivatives because their price depends upon certain underlying asset that could be a stock, currency, commodity etc. Derivatives include Futures Contracts and Option Contracts.
HOW TO TAKE ADVANTAGE OF DERIVATIVES
For those who want to diversify their portfolios beyond shares, bonds and real estate, commodities present the best option.Commodities actually offer immense potential to become a separate asset class for market-savvy investors, arbitrageurs and speculators and retail investors.
Commodity Investments are widely considered as a hedge against inflation. This implies that commodities be held for the longer term.
Diversified Investment Portfolio
An ideal asset allocation plan means having a diversified portfolio. Commodities are an important component of having a diversified investment portfolio. If you are already investing in stocks and bonds, it is suggested that you consider investing in raw materials simultaneously. This way, whenever there is a stock market crash, you are not putting all your eggs in a single basket.
Unlike investment vehicles like real estate, investments in commodity futures offer high liquidity. It is equally easy to both buy and sell futures and an investor can easily liquidate his position whenever required.
Lower margin (5 to 10%) to trade in commodity future contracts which is considerably lower than any other market.
Fewer segments to choose from - like bullion, energy, base metals and agri products.
Advantage of timings 10 am to 11.55 pm - suitable for investors.
Internationally trading commodities give excellent price fluctuation and liquidity provides chances for small and mega investors to take speculate, hedge and investment options.
Currency Derivatives are Future and Options contracts by which you can buy or sell specific quantity of a particular currency pair at a future date. It is similar to the Stock Futures and Options but the underlying asset happens to be currency pair (i.e. USDINR, EURINR, JPYINR OR GBPINR) instead of Stocks.
WHY CURRENCY TRADING?