8 factor framework for investing in any debt mutual fund
- Yield to Maturity – Expense Ratio
- Credit Quality: % of government, AAA and AA rated bonds
- Modified Duration
- Average Maturity
- Exit Load
- Historical NAV movement graph
You may have seen or noticed commercials of Mutual Fund Schemes that end with a standard disclaimer – ‘Mutual Fund investments are subject to Market Risk. Past performance may or may not be sustained in future. Past performance is not indicative of future returns.’
The two terms which are important here are ‘Returns’ & ‘Risk’ (or Volatility).
New retirees frequently rhapsodize about the joys of tossing of their alarm clocks into the trash and filling their days with whatever activities they find gratifying. But if they’re honest, most new retirees find the financial aspect of the retirement transition to be a little jarring.
Recently I received a mail from a reader that his friend has invested in equity mutual funds since 5 years. Returns are around 20%. His friend showed his fascinating investment history to this guy. Therefore, now he is also very much eager to invest in mutual funds (specifically in equity mutual funds) where his friend invested.
By mentioning, ‘SIP against housing loan (HL)’, you probably are referring to popular social media forward that suggests ‘if you invest in equity MFs (mutual funds) via SIP (systematic investment plan) for long-term horizon equivalent of HL tenure, you are likely to recover a large part of your HL EMIs from your SIP investment corpus’. This theory has certain assumptions like: not missing SIP installments, staying invested for long term -20 years equivalent to HL tenure and out performance of equities over HL Interest rates.