Expertise Corner

Dear all!
Voice Vision brings to you a new section known as the “Expertise Corner”!
In this section, from time to time we will feature an expert from a particular field, to whom you can put forward the queries and doubts related to the chosen subject, and have the expert answering them for you.
Our expert for this time is, Mr. Sameer Latey, Manager – Accounts with Chowgule Koster (India) Construction Chemicals Pvt. Ltd.
Qualification: Chartered Accountant.
Area of expertise: Accounting, Finance, Taxation, MIS, Budgeting, Research.

So, get ready with your set of questions on financial management, tax planning and any other field related to personal and corporate finance, and get Mr. Sameer tickling his brains when he answers them all.
You can pour in with your questions for the next 15 days, as the thread will be open only till 21st July 2010.
Stay tuned to believe it!
A session of Q&A’s was never this interesting and rewarding before.

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1. What is the different

1. What is the different types of mutual fund and what are the advantages of one over the other?for example open ended mutual fund, close ended mutual fund ,systematic investment plan(s I p). I invested in normal mutual fund there was a lock in period .after the lockin period the price of the fund went down. The next time I invested in systematic investment plan with a small amount it grew almost double in twelve months . How does both the mutual funds function?
2. How does the VI person read the sensex on the net what is the command to read the sensex

Mutual Fund Investments

Mutual funds are classified into various categories depending upon various factors like duration (open-ended, closed etc.), sectors invested in (infrastructure, telecom, Information Technology etc.) & frequency of investment (one-time, systematic, irregular etc.). Each mutual fund has it's own advantages & disadvantages. The decision on which mutual fund to invest in depends upon one's ability to take risk, period of investment, etc.

In the open-ended mutual fund, the initial lock-in period is to enable investors to invest at the initial unit price. The lock-in period also provides time for the investment manager to allocate the funds collected among various investment options.

The fall in investment value in one mutual fund & doubling of investment in another depends upon various factors like sectors invested in, amount of idle cash held by the fund manager, fluctuations in stock prices etc.
There can be no general rule that one type of mutual fund is better than another type of mutual fund. Each investor has to decide which fund is suitable for him or her after considering his investible amount, ability to take risk, need for money at specific intervals etc.

Wishes and 1st few sets of questions for Sameer

I think, this is the most innovative idea that VV would have done in past 10 years.
Congratulations to all those who thought about following way of discussion.
My 1st few sets of questions for Sameer is:
1 What is the different between mutual fund and ulips? Why 1 should avoid any of above or prefer?
2 How section 80-U is different from section 80-D? How visually impaired could take advantage of both at a time for his/her It.

First set of questions

Dear Rajesh,

I agree with you that this is one of the most important steps taken by VV in the last ten years.

Coming to your questions,

1. Mutual Funds vs. Unit-Linked Insurance Plans (ULIPs):

ULIPs are issued by insurance companies & are a type of insurance policy. The amount paid over & above the insurance premium is invested by the insurance company in equities or debt. ULIPs are regulated by the Insurance Regulatory Development Authority (IRDA).

Mutual funds do not come with an insurance option & are issued by mutual fund companies. These mutual funds are purely investment options. Mutual funds are regulated by the Securities Exchange Board of India (SEBI).

Apart from the insurance cover provided under ULIPs, there is very little distinction between mutual funds & ULIPs. Both invest in the stock market & in debt instruments. The returns from both are also comparable. This similarity between mutual funds & ULIPs led to the SEBI recently claiming regulatory jurisdiction over ULIPs which was settled by the Government in favour of IRDA.

2. Section 80U & 80D:

Section 80U provides for a deduction from the income of individuals suffering from specified disabilities. The amount of deduction available depends upon the percentage of disability of the individual.

Section 80D provides for a deduction from income of an individual of the amount paid for medical insurance. This medical insurance premium should be paid by cheque & should be paid for the individual, spouse or family members.

A disabled individual can claim deduction under both section 80U & 80 D if he or she satisfies the conditions specified under the respective sections. The deductions under 80D & 80U are not mutually exclusive.

Sameer

Which 1 better Bitween Mf/ULIP?

Thanks Sameer for replying following Q of my.
Continuing our discussion, was wandering, what makes you to say that the returns between Mutual fund and ULIPs are also comparable?
Which 1 according to you fetch more? Do you think, ULIP give more returns compare to MF?
Would it continue even post 1st of September’s clarity?

Hi rajesh I feel that

Hi rajesh
I feel that choosing between ulip and mf depends upon what you are
looking out for .Mutual fund is a totally investment scheme and ulip
is a mutual fund along with insurance .
If you have got your self insured for a safe value earlier then you
may not choose ulip ..
In ulip some part of your invested amount (you can decide how much
)called as elocation is used for insurance and the remaining amount is
invested in the market ..
The more you invest in insurance the lesser amount will be invested in
the market .for returns..the disadvantage of ulip is that if you
discontinue before the maturity period then a big amount is deducted
fromthe balance amount .Mortality charges are deducted which is quiet
high .so if you feel you are sure that you will continue paying till
the end then you may go for ulip

MF's vs. ULIP's

Both ULIP's & equity MF's invest in the same set of investments, primarily in shares of companies listed on the stock exchanges. Since they invest in the same instruments, they are comparable to each other. The differences in their returns are due to the abilities of the respective fund managers.

Also, ULIP's provide insurance cover to the unit-holders & charge an insurance premium for it as part of the unit cost.

Sameer