invest money in Mutual Funds of India?
A mutual fund is nothing but a
collection of stocks and/or bonds. You as an NRI - Non
Resident Indian can think of a mutual fund as a company
that brings together a group of people and invests their
money in stocks, bonds, and other securities. Each
investor owns shares, which represent a portion of the
holdings of the fund.
NRIs - Non Resident Indians can make money from Indian Mutual Fund in 3 ways:
1) Mutual Fund Income is earned from
dividends on stocks and interest on bonds, held by the mutual
2) If the Indian Mutual fund sells securities that have
increased in price, the Mutual fund has a capital gain.
3) If Mutual fund holdings increase in price but are not
sold by the fund manager, the Mutual fund's shares increase in
price. You can then sell your Indian mutual fund shares for a
*** Mutual Funds will give
you a choice either to receive a cheque or to reinvest the
earnings and get more shares.
Advantages of investing in a Mutual Fund scheme:
- Professional Management - Primary advantage of Indian mutual funds
is the professional management of your money. An Indian mutual
fund is a relatively inexpensive way for a small investor to get a
full-time manager to make and monitor investments.
- Diversification - By owning shares
of mutual fund in India, instead of owning individual stocks or
bonds, an NRI's - Non Resident Indian's risk is spread out because
large Indian mutual funds typically own hundreds of different
stocks in many different industries in one mutual fund itself.
- Economies of Scale - Because a mutual fund buys and sells
large amounts of securities at a time, thus the transaction costs
for NRIs - Non Resident Indians are lower.
- Liquidity - Just like an individual stock, an Indian
mutual fund allows you to request that your shares be converted
into cash at any time.
- Simplicity - An NRI - Non Resident Indian living abroad
can buy and sell Indian mutual funds online easily and
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Mutual Fund Tutorial
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