Sunday, 11 May 2008
Worrying About The Entry Load?
Entry load is the fees charged by the mutual fund for the expenses they incur. Usually it is 2.25%. That means if you invest Rs.1, 00, 00 then 2,250 will go towards the expenses. Now for some that might seem to be a lot of money. Considering the returns mutual funds generate one shouldn’t worry much about the entry load. After all if you invest directly in share market then too you have to pay the brokerage. Now one might argue that fixed deposits don’t charge anything and they give guaranteed returns. Then why should we invest in mutual funds? Well, that’s true but considering the 8% returns that FDs give we can definitely have a look at mutual funds. On the other hand returns from fixed deposits are taxable. Mutual funds do charge an entry load and they also carry a market risk but if we consider the past record, mutual funds have given a return of more than 20% annually. No other investment avenue has given such high returns. The only thing is to stay invested for a long time. The longer you stay invested greater will be the benefit. If you have the appetite for risk then investment in mutual funds is definitely a good idea.
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4 comments:
dear...
i went through your answers in the yahoo... you keep recommending mutual funds for each and everyone;
i appreciate your expectation that everyone should get benefited by the equities..
but try to understand a part of people can not tolerate seeing their money going down with their own eyes.
so make them to understand their risk appetite then make them to invest. everybody will thank you when their money is getting appreciated but only a part will stand in the markets's downfall and even a few of that part will invest more money in the downfall... understand this fsct and sact wise..
A mutual funds load is a problem, but not the only one. According to http://www.ameri-financial.com/headline-story/mutual-fund-owners-eyeing-big-tax-hit.html there are tax implications of owning a mutual fund. You might have a better luck with exchange traded funds (ETFs).
I am a Sansex ETF investor in Hong Kong. I spent 1/4 of my liquidity on it at the price of 22 HKD while it is 7.8 HKD sadly. But on the other hand, i think so far i can buy the same volume at 1/3 price.
I am a Sansex ETF investor in Hong Kong. I spent 1/4 of my liquidity on it at the price of 22 HKD while it is 7.8 HKD sadly. But on the other hand, i think so far i can buy the same volume at 1/3 price.
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