SAVINGS PHILOSOPHY- MUTUAL FUNDS

After you have taken the insurances and covered yourselves against unforeseen risks, now is the time to save for an emergency.
Try to have about 3-6 months of expenses in in a savings or SWEEP in account.
Do not touch this saving till you need in case of quitting a job or losing one.
Now is the crux of the entire story that I have been unraveling.
We must use the path of mutual funds for all the savings that we intend NOT to use for long time.
The experts will tell you that 3-5 years is a LONG time- not I'll say till the important stages for which you are savings have been achieved.
The Mutual fund that I'm talking and the ones that I've tried out are the Open Ended DIVERSIFIED EQUITY ones.
Their advantages being:
1. You can invest as much and as less (as Rs.500) you like.
2.You can invest systematically (ever month , every week or even EVERYDAY).
3. You will not need to withdraw without needing - as there is no maturity.
4. You can use it as a pension plan , Child education or any other purpose as you like- even repatriating it if you've invested as a NRI.
5.There is no entry load (commission) on these investments now.

The mutual funds invest it in the stocks of various companies. As the no. of companies is fairly large your risk is quite spread with the various companies and sectors.
One must invest in a maximum of 7 funds.
Few axioms that I give to my colleagues on board ships is:
1. Never invest in a NFO (new fund offer).
2. The fund that you select must be at least 3-5 years old and a proven track record.
3. Avoid Sector funds and invest in diversified equity type.
4. Invest with a second applicant (being a close family member) on EOS(either or survivor)basis.
5. Use the option of nomination.
6.Put a common email address while filling the forms of all the mutual funds.
7. For dividends or redemption use the DIRECT CREDIT TO BANK option. This will expedite the process of getting your money.

For more learning on the subject, visit valueresearchonline.com - it is the virtual bible of the mutual fund industry and will be very helpful for selecting your funds.