Various posts about Mutual and Growth Funds.

[franklin]

People basically invest to make money, and how?? Buy buying low and selling high. But who’s going to determine or guarantee the appropriate price of a stock before purchasing or a fund prior to investing. The performance or output of a fund anyone invests in depends on the psychology of the fund manager. Different funds from various fund houses may perform differently because, though they have the same aim, there style of operation and priority levels are different. So, given a choice always choose a fund with a good and consistent track record.

A Growth Fund is basically a mutual fund that is made or compiled by a stock of companies in order to yield better dividends. They do re-present the potential for superior growths but then it is a bit risky. On a whole investors prefer to invest in a growth fund over a general income fund as they offer better greater return potentials. Moreover their basic aim is to strive for both dividend income and capital appreciation as they invest in companies that are reputed for dividend payments and capital gains.

They are also termed as equity funds as the goal is to achieve long term capital growth rather then regular income. It is always wise to invest in a diversified Growth Fund that not only covers a group of companies but a variety of sectors as well as this investments enables the investor to bifurcate their resources hence opening them up to a wide range of options. Say if you are investing in a Growth Fund that has five stock options namely IT, cement, steel, pharmaceuticals and FMCG (Fast Moving Consumer Goods).Now say two or three out of these five stocks isn’t doing well enough and you are loosing out on investments, still you will have another couple of units left to look forward too.

Growth Funds are basically categorized into two categories, 1) Aggressive, 2) Conservative. An aggressive Growth Fund is a mutual fund that attempts to achieve the highest capital gains. Investments held in these funds are by companies that demonstrate high growth potential. People investing in this sort of growth funds should be ready to accept a high risk-return trade-off. They are also referred to as “capital appreciation fund” or "maximum capital gains fund". Eg : Franklin U.S opportunity funds. Now the Conservative part. A conservative growth fund is exactly the opposite of an aggressive growth fund. Here the investment is basically targeted to a section of people who are willing to earn on a regular basis rather then a high capital gain. It is safe and secured and is a non-risky investment.

Basically most investors prefer investing in specific sectors such as IT (Information and Technology) or FMCG (Fast Moving Consumer Goods).In order to suit their needs, sector specific schemes are launched, to enable the investors to decide just how aggressive or conservative they want to be. As of today IT forms the most popular sectoral fund, although a variety of other funds also exist. Some examples are the Birla IT Fund, Alliance New Millenium, and Prudential ICICI FMCG Fund. These funds basically
invest across various sectors, primarily focusing on the modus of operandi of Multi-National Companies . This makes it a speciality rather than a sectoral fund. However they run a higher risk than diversified general equity funds, but one can expect higher long term returns as well.

[franklin]

A Growth Mutual Fund also termed as Equity Funds are primarily invested in fast growing firms with the primary objective being Capital Appreciation – that is the profit you make from the Asset (Stock, Fund, Bonds) you invest upon. Growth Mutual Funds also defines the growth of that particular investment, i.e increase in its market price compared to the amount invested. It is also termed as “Capital Growth”.

A Growth Mutual Fund is more risky to be invested upon compared to an ordinary Mutual Fund but the premium or dividend that is derived is much higher then what is obtained from a normal Mutual Fund. Its performance is proportional to the performance of the Stock Market. That is when the Stock Market undergoes losses the value and price of the Fund falls rapidly compared to other Funds and similarly when the Market hits a high the price of the fund shoots up. People basically invest on Growth Funds keeping in mind long term goals. The reason, the logic behind the investment is that the companies, firms or organizations invested upon will grow in value, thereby allowing the fund to reap the benefits of large capital gains.

Basically a Growth Mutual Fund is categorized into 1) Aggressive Growth Fund, 2) Capital Appreciation Fund, 3) Balanced Fund and 4) Crossover Fund.
An aggressive growth fund basically aims for the highest capital gains and its investments are comparatively risky compared to the other Growth Funds. A Capital Appreciation Fund is also an aggressive growth fund that seeks maximum growth by Primarily Investing in stocks and takes excessive risks as far as the Assets to be invested upon is concerned. The Assets of a Balanced Fund comprises of common stock, preferred stock, bonds, and short-term bonds, The Prime Objective of a Balanced Fund is to provide both income and long time capital gains while avoiding excessive risk. These kinds of Funds have the maximum amount of investors, solely due to the fact that unlike the other aggressive funds this provides security along with the gains. A crossover fund has an investment both in the Public and Private Equity sector.

As far as investing in a Mutual Fund is concerned it is extremely important to bifurcate your finances amongst the Assets that you choose to invest upon. Asset Allocation is an important factor from the investor’s point of view. Choosing your assets properly will fetch you good returns. Prior to investing on a Mutual Fund it is necessary that you find out that the Fund you are targeting is worth investing upon or not. Every Mutual Fund publishes a set of documents that defines the value and reputation of the Fund. The three prime documents are 1) The Prospectus, 2) The Statement of additional information and 3) Annual Report. After the analysis is done choose your Assets (Stocks, Bond, funds, etc) carefully. The reason if you invest in four assets at a time and the return from the first two is a loss, you have the other two assets to give you the gains and hence your net asset value is stabilized. All in all your Mutual Fund NAV determines how good your investment was. Also consult a Fund Manager prior to making the investment, as it is him who decided the performance of a stock in the market.

[franklin]

People basically make an investment, to earn money in the longer run. It is usually said that “One time investment should be a life long asset”. So when the investment part is being made it is extremely important to know where your money is going. No investment can be exactly termed as “safe” or “secured” in the exact sense, but that shouldn’t deter the prospects on gaining in on wealth. Mutual Fund Investments has always proved beneficial in amassing life long benefits financially.

A Mutual Fund is a channelised financial hub, usually governed by a third party that permits a group of investors to invest their money together with an objective. The mutual fund basically has a fund manager who undertakes the responsibility of investing the gathered amount into specific securities such as bonds and stocks. When you invest in a mutual fund, you basically buy portions or shares of that particular fund and accordingly you are entitled to become a shareholder. Mutual Fund Investments are considered to be the most cost-effective investment and are highly popular due to its diversification.

Diversification is the art of bi-furcating your financial investments and investing in various schemes such that when one investment is down you can always bank on the other for your dividends. The basic level of diversification is to buy multiple stocks rather than just one stock. Now to the promotional offers. Look it is very obvious that anyone who runs a business will definitely promote it aggressively and claim it to be the best. But there is a statement that is made after a promotion that reads "Mutual Funds Investments are subjected to market risks, kindly read the offer document before investing". The performance or output of a fund anyone invests in depends on the psychology of the fund manager. Different funds from various fund houses may perform differently because, though they have the same aim, there style of operation and priority levels are different. So, given a choice always choose a fund with a good and consistent track record. Always do some amounts of market research and a bit of discussion with associates who are into the investing part, if possible hire a professional so that he can guide you with the investments. The rest will be fine.

For Newbies, prior to investing, you should be having an Idea as to what stocks, funds and shares are and why are they invested upon. If you are still unclear, take up the help of a CA (Chartered accountant) or a financial adviser. Clear your basics first. Secondly the performance or output of a fund/stock anyone invests in, depends on the psychology of the fund manager. So, given a choice always choose the ones with a good and consistent track record. Always remember investments are made to garner good dividends, so be sure where ever you are investing, the dividends should come from. Even if the stock you are investing upon provides you slow but secured dividends you should go for it. There are many stocks in the market that provides you with high capital gains, but then they are extremely risky. So you being an amateur should try avoiding that. Learn the game first and then play it.

[lori99]

With the weak US dollar, I would suggest investing in currency funds offered by companies like Barclays Global.