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Mutual Funds
Welcome to the world of Investments! Let your money grow with mutual funds investment solutions from Federal Bank
- Features
- How to Apply ?
- Benefits
- Systematic Investment Plan (SIP)
- Documents Required
- Disclosures
Money is one of the biggest necessities of life. Today, more than ever before, with rising aspirations, numerous opportunities to spend and longer life spans, merely earning a good income is not enough; it is equally important to invest your money wisely to ensure that it generates a good return. But selecting appropriate financial tools can sometimes be a bit tricky. And, that's exactly why it always helps to know as much as you can about investing.
What is a mutual fund?
Key features
- Professional investment management.
- Diversification of Portfolio.
- Low Cost of Investment.
- Convenience and Flexibility to invest any amount anytime.
- Quick and Personalized Services from AMC.
- Ease of Investing.
- High Liquidity.
- Choice of Dividend or Growth Options.
- Tax Savings Funds also available
Federal Bank has tied up with the following leading AMCs in the country:
- Birla Sun Life Mutual fund
- L & T Mutual fund
- Kotak Mahindra Mutual fund
- DSP BlackRock Mutual fund
- Reliance Mutual fund
- SBI Mutual fund
- Franklin Templeton Mutual fund
- Sundaram BNP Paribas Mutual fund
- HDFC Mutual fund
- Tata Mutual fund
- HSBC Mutual fund
- UTI Mutual fund
- ICICI Prudential Mutual fund
- Edelweiss Mutual Fund
If you are interested to invest in Mutual funds, please visit any of our branches
Diversification
Professional Management
Liquidity
Flexibility
Cost Effective
Well Regulated
Mutual Fund Systematic Investment Plan (SIP) gives an opportunity to create wealth over long term. Systematic Investment Plan is like a Recurring Deposit wherein the investor needs to remit a fixed amount into a chosen scheme for a predefined period. The advantage of SIP is that there is a lot of flexibility to change all these parameters subsequently also based on any change in our Investment Horizon or our expectations from the schemes.
SIP work using two important levers- Power of compounding and Rupee cost averaging.
How does Power of compounding work in SIP?
The compounding refers to the re-investment of income at a rate of return to constantly grow the principal amount year after year. Getting the benefit of the Power of Compounding requires the customer to remain invested for a longer period. Starting early in life and remaining invested focusing on specific goals is the basic mantra of investment.
An illustration is given below to prove the point. Compounded Annual Growth Rate of 10% considered for illustrative purpose.
Investor | A | B |
| Invested Rs 1000 through SIP at the age of 20 | Invested Rs.2000 through SIP at the age of 40 |
Total amount Invested | 480000 | 480000 |
Amount at the age of 60 | 63.24 lakhs | 15.19 lakhs |
What is Rupee Cost Averaging ?
Rupee cost averaging helps to buy more units when markets are low and less units when markets are high. The following illustration explains the principle behind rupee cost averaging.
| Lumpsum Investor | Regular Investor (SIP) | |||
---|---|---|---|---|---|
Month
| Unit Price/ NAV | Amount Invested (in Rs.) | Units Purchased | Amount Invested (in Rs.) | Units Purchased |
1 | 25 | 100000 | 4000 | 10000 | 400 |
2 | 28 |
|
| 10000 | 357 |
3 | 30 |
|
| 10000 | 333 |
4 | 27 |
|
| 10000 | 370 |
5 | 24 |
|
| 10000 | 417 |
6 | 26 |
|
| 10000 | 385 |
7 | 23 |
|
| 10000 | 435 |
8 | 20 |
|
| 10000 | 500 |
9 | 22 |
|
| 10000 | 455 |
10 | 25 |
|
| 10000 | 400 |
Total Units Purchased
|
| 4000 |
| 4052 | |
Total Amount Invested
|
| 100000 | 100000 |
| |
Average Price (Rs.)
|
| 25 | 25 |
| |
Value of investment after 10 months
|
| 100000 | 101300 |
|
Suppose a monthly SIP is for Rs 1000 and the fund's net asset value (NAV) is Rs 10. This will result in 100 units being credited to you. However, next month, on account of volatile market conditions if the fund's NAV falls to Rs 5, you will get 2,00 units. This will lower your average purchase cost. A SIP helps you to buy more when the stock market is falling and less when it is rising. |
Proof of Identity (POI)
- PAN card with photograph.
- Unique Identifi cation Number (UID) (Aadhaar)/Passport/Voter ID card/Driving license.
- Identity card/ document with applicant's Photo, issued by any of the following: Central/State Government and its Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, Public Financial Institutions, Colleges affiliated to Universities, Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their Members; and CreditCards/Debit cards issued by Banks.
Proof of Address (POA)
- Passport/Voters Identity Card/Ration Card/Registered Lease or Sale Agreement of Residence/Driving License/Flat Maintenance bill/Insurance Copy.
- Utility bills like Telephone Bill (only land line),
- Bank Account Statement/Passbook -Not more than 3 months old.
For Non-Residents
- Copy of passport/PIO Card/OCI Card and overseas address proof (Bank Statement) is mandatory.
- PAN card with photograph.
For MICRO SIPs (Resident and NRI) Micro SIPs - the aggregate of installments in a rolling 12 month period or in a financial year i.e. April to March does not exceed Rs 50,000/- Unique Identification Number (UID) (Aadhaar)/Passport/Voter ID card/Driving license.
Other Documents
The following documents are also required for investing into Mutual funds:
- CAF (Common Application Form)
- Auto Debit/ ECS Mandate forms
- KYC forms (One-time registration of KYC compliance is required for investment across all funds.)
Prevent Unauthorized Transactions in your demat account - Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from NSDL on the same day. Issued in the interest of investors. KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary. No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account