What is a Mutual Fund - Concept and Types

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Mutual fund is a trust that pools and invests investors money to achieve a common goal. Income earned through these investments is divided in the ratio of number of units held by investors. Investors are beneficial owners of mutual fund in the ratio of their holding.

Common goal doesn't always means maximum returns. This may be safety from market risks with normal returns.  

 Mutual Fund Working

Advantages of Mutual funds to investors

  • Low transaction costs
  • Portfolio management by experts
  • Diversification of investment
  • Risk reduction
  • Reach to foreign markets

Disadvantages of Mutual funds to investors

  • Difficult to choose between 800 schemes
  • High management and distribution costs
  • Can't reap benefits of intraday movements. 
Mutual fund NAV is calculated everyday at 3 pm in case of open ended schemes and on Wednesday in case of close ended schemes. So in case of market crash, there is no way out for mutual fund investors
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NISM V-A Mutual Fund exam - Guide

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With effect from January 1, 2010 anybody who is involved in sales and distribution of mutual funds need to pass NISM V-A series mutual fund exam. This exam aims to set a minimum educational benchmark for mutual fund distributors.

Exemption from NISM series V-A mutual fund exam

A person who have completed 50 years and have 5 years experience in selling mutual funds. Any other person need to pass this exam to sell mutual fund schemes.

Exam Structure

It is an online test. There are 100 questions consists of 2 marks and 1 mark questions. There is 25% negative marking. So for every wrong answer, 0.5 marks will be deducted in case of  2 mark question and 0.25 will be deducted in case of 1 mark question. The result of exam will be shown to you when
you finish the test.
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Capital Rationing - Process and Why it is required

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It is a well known fact that there are endless opportunities in market in almost every niche but to encash every opportunity funds are required. So a wise man will choose the best opportunity with lowest risk and highest return in less time. To measure risk we use various statistical methods but to measure in monetary terms we use Capital Rationing 

Capital rationing technique is used when company has limited fund for investing in profitable investment proposals.

Capital Rationing in simple words refers to a situation where an organization cannot undertake all the projects which are having positive net present value because of shortage of capital. When company do capital rationing than it will select only that project which gives the company maximum profit.
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Rule of 72 - Time taken by Money to double itself

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If I give you Rs. 1,00,000. In how much time you can double it if the rate of interest is 6%.

You will take about 10 minutes to calcuate this, but there is a simpler method to calculate the time to double your money. Simply divide 72 by rate of interest.

Number of years required to double money = 72/ Annual rate of interest

In above case rate of interest is 6% thus it will take 72/6= 12 years to double itself.

Just try yourself.
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Best 5 Reasons To Use A Credit Card Instead Of Debit This Festive Season

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Credit and debit card are both plastic money whereby the users pay to the dealers directly from their accounts and thus need not carry much hard cash which is extremely risky. The modes of payment in these two cards are very different. Whenever we do some transactions using the debit card, the money is directly debited from the account to the source accounts. On the contrary when a credit card is swiped the amount is borrowed from the banking institution whose credit card it is and paid to the dealer. Later on you need to pay back to the credit card issuing company.

Though many users are of the opinion that debit is much better in comparison to the debit card, here are five important reasons why you should depend on the credit card instead of the debit card.
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4 Tips to be considered for Business Financing Decisions

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Business financing  is the financing of long-term loans based upon a complex financial structure where project debt and equity used to finance the business are paid back from the cashflow generated by the business.

Key Business Considerations: The key Business Considerations which are relevant for Business financing decisions are:
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6 Tips for Risk-Free Retirement Investing

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Its an conventional advice that we should invest in a mix of stocks and debt, minimize the risks and maximize the returns to reach our retirement goals. As both money and stock markets are volatile, its quite difficult to find a low risk investment options. Although option of Treasury Inflation Protected Securities (TIPS) are bonds that promise a total return that adjusts with the CPI index for inflation. Although TIPS is risk free but it gives a minimum return and you may not reach your retirement goals. So i came up with some tips to make your investment portfolio risk free and maximize your returns
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How to use a Credit Card wisely

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A credit card is a great financial tool in the hands of a rational and wise consumer while it creates bondage of debt to those who make misuse of a credit card. One basic thing that should be clear to all credit card holders that credit card is not your money, it is the money you borrow from a credit card issuer, so you should use this money wisely. You should be careful while using a credit card because its quite easy to fall in a debt trap too quickly.
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