Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document.
Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders.
The profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public.
SIP - Systematic Investment PlanA Systematic Investment Plan (SIP) is a method of investing in mutual funds where investors contribute a fixed amount of money at regular intervals, typically monthly or quarterly. It's like a recurring deposit, but instead of saving in a bank account, the money is invested in the stock market through a mutual fund.
STP refers to the Systematic Transfer Plan whereby an investor is able to invest lump sum amount in a scheme and regularly transfer a fixed or variable amount into another scheme.
In case of a volatile market, STP helps the investors to periodically transfer funds from one scheme (source scheme) to another (target scheme) and help them save the effort and time by compressing multiple instructions required for redemption from one scheme to invest in the other into a single instruction.
SWP ( Systematic withdrawal plan)A systematic withdrawal plan allows you to redeem your investment from a mutual fund scheme in a phased manner. Unlike lump sum withdrawals, SWP enables you to withdraw money in instalments. It is quite the opposite of a systematic investment plan (SIP).
In an SIP, you channel your bank account savings into the preferred mutual fund scheme. Whereas in an SWP, you direct your investments from your mutual fund plan to your savings bank account.
Systematic withdrawal plans allow you to customise the cash flow as per your requirements. You can also choose to either withdraw just the capital gains on your investment or a fixed amount. This way, you will not only have your money still invested in the scheme, but you will also be able to access regular income and returns. The money that you withdraw can either be used to reinvest in some other fund or can be retained by you in the form of cash.
Mutual Fund Types
STOCK FOCUS FINANCIAL SERVICES PRIVATE LTD (SFFS) is a premier financial services provider. Headquartered in Trichy. Incorporated in Dec 1999 as a sole proprietorship firm with Mr S.Gurumoorthy(late)
