Several months back I had posted an article How to create wealth using Mutual Fund Route. Many people e-mailed that they had already started SIPs in schemes like Magnum Contra, Franklin Bluechip etc. Few persons who had started investing in Magnum Contra stated that they are seeing falling NAVs and are apparently worried. No one needs to worry for the following reasons.
IF YOU READING THIS IN KASHIWALA'S SITE, IT IS ORIGINAL. IN OTHER SITES, IT IS PIRATED.
a. Our own near and dear ones are investing in Magnum Contra SIP @Rs.3000.00 per month and our highest NAV purchase price was Rs.39.00 and lowest was Rs.23.50. In the meantime, we have received a dividend of Rs.4.00 per unit.
b. My advice to people is to invest at least for seven years in Dividend reinvestment option (more if you can) and wait for 3-4 years more.
c. Try to aim at a corpus of at least 15000 units or 20000 units within this time. Do not count your investment in Rupee value, rather count in in terms of number of units.
d. When the NAV is low, you get more units. When the NAV is high, you will get more dividend which will be ploughed back as further investments.
e. After a period of say, 8-10 years, if you have achieved your goal of 20000 units (suppose), convert it into dividend pay out option. Even if the fund pays a dividend of Rs.6.00 per unit, you will get Rs.10000.00 per month (Rs.120000.00 per annum). Presently when the NAV was around 29 during the years 2006 and 2007, the fund paid a dividend of Rs.4.00 per unit.
f. Finally, do not be perturbed by the falling NAV. This will help you indirectly by bringing more units into your kitty. Continue your SIP. Those readers who have not started any SIP, may start now with at least 3000 to 4000/- per month with a clear cut aim of at least 20000 units in another 7-8 years time.
g. The positive factor in the overall mutual fund industry is that they are sitting on a pile of cash and are making selective investments. So, their own investments will get averaged and we can expect better times ahead.
h. Last but not the least, have a positive view of the market and your investments. In the long run, nothing will go wrong.
IF YOU READING THIS IN KASHIWALA'S SITE, IT IS ORIGINAL. IN OTHER SITES, IT IS PIRATED.
Good luck.
Kashiwala
1 comment:
Kashiji,
Good to see your post and god bless you and your family.
I didnt understand what you meant by dividend payout. In your example we had 20000 units and suppose the NAV at that time is 50. We can redeem Rs.1000000. am I understanding correctly ? If not would appreciate if you can put some light on it.
Thanks
Nitin Pillai
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