Mutual Funds – Beginner Doubts

POSTED BY Rohit Majumdar ON June 6, 2012 1:08 pm COMMENTS (5)

I am 29 yrs old and want to start investing in mutual funds via the SIP route.
I have a long term horizon and have short-listed few MF’s in the Large – Mid cap Equity diversified funds to start off with –

1. Quantum Long Term Equity – D
2. Canara Robeco Equity Diversified
3. UTI Opportunities
4. HDFC Top 200
5. UTI Dividend Yield

I want to start by investing Rs 2000/- each per month in 2 funds. With increase in income, will look at adding a pure Large cap or a Balanced fund.
I have a few doubts/questions that I was hoping to get clarified in this forum:

1. What is the difference between a ‘Dividend’ and ‘Growth’ plan for a fund (For e.g. Canara Robeco Equity diversified – Growth and Dividend)? Which is beneficial for a long term investor (5-7 yrs)?

2. What are the tax implications of MF investing (Capital gains etc.)? And would I need to track my capital gains during annual tax calculation exercise?

3. There seems to be a huge difference between 3yr/5yr ‘Returns’ Vs. ‘SIP Returns’ (as per Value Research fact sheets). Isn’t this a negative aspect of SIP investing?

5 replies on this article “Mutual Funds – Beginner Doubts”

  1. Rohit Majumdar says:

    Hi Ashal,

    I have been scouring the forum archives to get the most out of it.
    A lot of good threads and I’ve got a lot of useful info.


  2. Rohit Majumdar says:

    Thanks kramasundar.

    I also noticed that SIP Returns were significantly lower than Returns (from lumpsum investment) for different funds. I suppose with SIP, one benefits from rupee cost averaging and also instills investing discipline.

    Any other thoughts on this aspect?

    1. Dear Rohit, first of all please spend some time to read past discussions. A lot of knowledge is there in old discussions. You are not the first person & not the last to post such basic queries. We can answer it immediately but instead of spoon feeding you, we want you to take some efforts to gain knowledge for yourself as well as to educate yourself from your own efforts.

      Regarding the Comparison of SIP v/s Lump sum, Do you have 1L or 5L or 25L Rs. right now to invest in? Answer is no. Then how can you compare the 2 things?

      Please do note, People who had invested lump sum amount during Nov. 2007 to Jan 2008 period are still licking their wounds to get over from their heavy losses still there in their portfolios.

      Data can be twisted any time to get the desired result.



  3. Ramesh says:

    Please go through the various threads in this forum. Then you can ask, if you still have queries.

    1. kramasundar says:


      2. With equity funds there will be short term gain tax. but if you redeem your units after one year it is tax free!

      3. Sip is better in the long run 5+ years. valueresearch has many columns on that.

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