How to Book Profits in Mutual Fund Growth or Dividend-Reinvestment Schemes SIP

Respected Readers, 

If you make a long term SIP in mutual fund growth or dividend reinvestment schemes and unfortunately the market is fall like 1992 2008 2013 2016, then most of your profit goes back and your portfolio value may down below your primary investment (principal investment). 

For example:- 

On 21 Jan 2013, 

Suppose you accumulated 1000 units of HDFC top 200 G mutual fund scheme, and your average buying price is 200 per unit, so your basic investment is 1000*200=INR 2,00,000 NAV of HDFC Top 200 Growth fund on 21 Jan 2013 was 234.759 So market value or value on NAV of your 1000 units was 1000*234.759=INR 2,34,759 

So on 21 Jan 2013, you are happy to see that you get INR 34759 Profit (17.37% Return) on your investment of INR 2,00,000.

Unfortunately, the market is fall and NAV of your mutual fund are also fall.

( For more details, please refer Chapter 24 of my book because I write this article give more insight on chapter 24 "How to Book Profits in Mutual Fund SIP" of my book "The Winning Theory in Stock Market"). 

So after this market fall as on 21 Aug 2013 NAV of HDFC Top 200 Growth fund was 187.204.

That time market value or NAV value of your units was:- 1000*187.204=1,87,204 

Now you lost all of your profit 34759 also lost your basic principal amount 12796 That time you worried that why not you sell your units on 21 Jan 2013. 

So I innovate a profit booking formula for mutual fund SIP. You read his method in chapter 24 of my book. 

Those who not buy my book, please refer this earlier article: - Sharegenius Formula of Mutual Fund Profit Booking 

As per this formula "When your total portfolio value grows 11% then book your 33% corpus and continue you’re SIP." 

Some of my followers still not understand this formula clearly and demand that I upload an excel sheet to clear this formula.

So I make an excel sheet of Last 5 Year 2000 per month SIP in HDFC Top 200 G Fund, In this excel sheet I show how you book your profits using my sharegenius formula download this sheet from this link:-

Excel Sheet with practical example of profit booking in mutual funds with my formula 

Now you may still argue that instead of profit booking if we continue to hold these units then we get more return if they compare profit booking of INR 22885.68 in above sheet.

So please remember:- 

1. Currently, the market is high, and when the market is correct then most of your notional profit also run away from your portfolio but if you book your profit 22885.68, then it never went in any situation. 

2. If we re-invest this total amount of INR 74576 (which we get through the selling of units see the last row in above excel sheet), then this amount also earn from bank FD or individual stocks. 

3. Finally, I have other revolutionary Idea that if you do not want to use this money INR 74576 which we get by selling of units. Then revert this formula and re-invest last profit booking again when your portfolio value down 11%. It means sell units when portfolio value rises 11% and reinvest this money when portfolio value down -11%. 

I make this excel sheet again with this reverse sharegenius formula, and you wonder that this time, our total profit is INR 41127.29 

Download this 2nd excel sheet here:- 

Excel sheet what happen when we sell on 11% rise and reinvest on 11% fall.

Please remember this formula is only for growth schemes and dividend re-investment plans, new readers, please read this article to understand that why I prefer dividend reinvestment instead of growth plans:- 

Compare Growth v/s Dividend Reinvestment in Mutual Funds

One other thing that If you want regular tax free income from mutual funds then use this formula:- 

Monthly Tax-Free Dividends Through Mutual Funds

Some of my followers have very suspicious nature, so they comment on my earlier posts and doubt on my historical NAV data. 

They think my data are wrong so this time, I provide the link where I download data of past NAV which I used in above excel sheet, You may also use this link to download past NAV history of any mutual fund scheme and check my theory in your mutual fund scheme:- https://www.personalfn.com/tools-and-resources/mutual-funds/nav-history.aspx 

Finally, This is your time to comments, better what you think about it? If you try different % in above sheet and better % ratio, then do not forget to share it in comments.

Time to Start a SIP in Reliance US Equity Opportunities Fund @ 9.90

Respected Readers,

Reliance US Equity Opportunities Fund NFO was come in 03 July 2015 to 17 July 2015 at NAV of 10 per unit 

 My Regular followers knew that I always avoid to invest in NFO because after a NFO in most of cases we see price of fund NAV fall below NFO price read some past example here:-
Best European Mutual Fund in India
or
Reliance Infrastructure Fund Review

So as our earlier experience now NAV of Reliance US Equity Opportunities Fund is fall below 10 and currant NAV of this fund is 9.90 only

So we now start a SIP of 1000/- per month in this fund

Which option we choose in growth and dividend fund:- If you are a new reader then you may confuse to see that 2 schemes is avalible in this fund 

Reliance US Equity Opportunities Fund (G) or growth plan

and

Reliance US Equity Opportunities Fund(D) or dividend plan

so which plan is best?

OK I have a separate detail article on this issue where I explain how dividend re-investment is 3 time better then growth plan, if you not read it yet then please read it here:-

Growth Plan vs Dividend Reinvestment in Mutual Funds 

So in light of above article I recommended to choose dividend re investment option but if you like to get regular monthly tax free income from this fund then choose growth plan and read this article to knew how to get regular monthly income from mutual fund growth plan:-

How to Get Regular Monthly Income from Mutual Fund

Now I tell you why I choose Reliance US Equity Opportunities Fund in all international fund which invest in US market.

Actually Most of international mutual funds are fund of fund ( fund of fund means a mutual fund which hold units of another funds),  but Reliance US Equity Opportunities Fund is directly invest in US stocks here is the situation of  Reliance US Equity Opportunities Fund portfolio as on 31 March 2016

Name	%
Mastercard	8.73
Express Scripts Holding Co	7.61
Baidu Sp ADR-A	7.56
The Priceline Group Inc	6.83
Alphabet Inc A	6.81
Blackrock Inc	6.76
Time Warner Inc.	6.68
VENTAS INC	5.95
WW Grainger Inc	5.21
PAYPAL HOLDINGS INC	4.13
Cooper Companies Inc	4.08
COMPASS MINERALS INTERNATIONAL INC	4
Cme Group Inc	3.79
ITC Holdings Corp	3.64
Discover Financial Services	3.38
Alphabet Inc	3.33
Carmax Inc	2.74
Ebay Inc	2.53
Potash Corp Of Saskatchewan Inc	1.46

So I think direct holding reduce fund management fees because if we buy a fund of fund then we pay fund management fees for both of funds.(one is original fund and  second is holding fund )
Recent Update:-
Buy MTNL @ 18.10

Equity Mutual Funds That Pay Monthly Dividends: How to Grow Your Money Tree.

From past many years I search a equity mutual fund that pay monthly dividends. 

Unfortunately I not find such type of Indian equity mutual fund that pay monthly dividends but I have an alternate that change your idea to locate equity mutual fund that pay monthly dividends.

Before we continue on this idea I want to clear some basic things.

Why I want equity mutual fund that pay monthly dividends?:- If any equity mutual fund pay me monthly dividends then I get regular dividend income which is income tax free in India so I utilize this tax free dividend income as my second income source or I make my own stock portfolio with help of this tax free monthly income.

and my original investment use for wealth creating through mutual funds. I think this is a great idea so I locate such type of funds but result is zero(nil).

Why not we choose MIP ( Monthly income plans):- Many of my readers think that today I put wrong information on my blog because many MIP-MF is available in India like SBI Magnum monthly income plan, Birla sun life MIP etc then why I say I not found any equity mutual fund that pay monthly dividends?

OK,  MIP is a debt mutual fund scheme which invests a small part of his funds (10-25 per cent) in equities and remaining (75-90 per cent) in debts. 

It offers regular income in the form of periodic (monthly, quarterly, half-yearly) dividend payouts.

So MIP is categorized under debt fund and MIP is not treated as equity fund so MIP dividends are debt funds dividends which are tax free but company liable to pay DDT ( Dividned Distribution Tax) in debt fund dividends so overall this DDT reduce my returns on MIP and MIP dividends returns are very poor like a saving account interest.

What Alternate we have to get regular monthly income from equity mutual fund:-Now I tell you my shocking research that how we get regular monthly income from equity mutual fund with mix combination of SIP&SWP. Become your own fund manager and every month sell your fund units to get 1% amount of your fund value as your monthly dividend income. 

Step by Step detail of this Idea:-

1.Make a lum-sum investment of minimum 1.00 lac in any good diversified equity growth fund with good track record of past 5 years. 

2.I advice to make a lum sum investment of minimum 1.00 lac because 1% of this 1.00 lac is 1000 and I want minimum 1000 per month income by selling of my units because selling of fund unit below value of 1000 is not allowed in most of mutual funds. 

3.Now start a 2000 per month SIP in this mutual fund for regular increment in your fund value and monthly tax free gain. 

4. Now wait minimum 1 year to grow your fund with market because selling of mutual fund unit below 1 year holding is taxable in income tax rules. 

5. After 1 year your tree of money is ready for fruits now sell your units every month to get 1% of your fund value for that month. 

I apply this example in HDFC top 200 G fund from 1 march 1999 to 1 march 2016, I provide my excel sheet to you where you see:-

Our total notional investment in last 17 year is 5,08,000 

We get total monthly dividend ( actually not dividend it is long term capital gain from systematic withdrawal) of 13,98,879 Our holding is still in profit of 4,13,527 

Amazing, 

Download this excel sheet here:- 

https://drive.google.com/file/d/0BwqVx444SxLaNVZPNC1tcTN0dWc/view?usp=sharing

Now it is your time to comment.

My Recent Update:-

Hindi version of maheshkaushik.com 

Please remember mutual fund investment are subject to market risk and past performance is not a guarantee of future performance author of this blog is not a registered mutual fund adviser so please consult your mutual fund adviser before investing my full discloser is:-

10. Discloser:- Author is not a registered mutual fund adviser but I Mahesh Chander Kaushik author of this research report is an existing research analyst and passed NISM certification for research analysts. I am also registered under SEBI(RESEARCH ANALYSTS) REGULATIONS, 2014 ( SEBI Registration Number INH 100000908 ) hereby disclose about my financial interest in the subject company and the nature of such financial interest:- 1 I am personally not hold units  of hdfc top 200 fund but my wife hold units of hdfc top 200 fund  so my personal interest is included in this fund 2. Me and my associates or relatives have not any actual/beneficial ownership of one percent or more securities of the subject company (  hdfc top 200 fund ). 3. Me and my associates or relatives have not any other material conflict of interest at the time of publication of the research report. 4. Me and my associates or relatives have not not received any type of compensation from the subject company(   hdfc top 200 fund ) in the past twelve months. 5. I am not served as an officer, director or employee of the subject company( hdfc top 200 fund ). 6. I have been not engaged in market making activity for the subject company(  hdfc top 200 fund  )

Top 10 Mutual Funds for SIP to Invest in 2016

Respected Readers,

on 18 march 2015 I declare top 10 Indian mutual fund schemes of 2015 for SIP investment. here is the link of this earlier article:-

Top 10 Mutual Funds for SIP to Invest in 2015

Now it is the time to discuss top 10 mutual funds SIP to invest in 2016.

Last year I choose only Indian funds in this top 10 list but now I think any one can diversified his mutual fund holding globally.

So in my 2016 top mutual fund schemes list I include top 10 Indian mutual fund schemes which invest in India and abroad.

How I choose top mutual fund scheme?:- As you read in my book (The Winning Theory in Stock Market)that size of AUM is a best criteria to choose a mutual fund scheme.

What is AUM:- AUM means asset under management  I give you a example if fund X corpus is 100000 rupee and fund Y corpus is 500000 rupee then which fund have better chance to diversification I think it is fund Y have better chance of diversification due to It's large AUM size.

Generally I say

" It is difficult to earn 100 rupees from 100 rupee investment but it is easy to earn 1 Cr. from 1Cr. rupee investment.

Read this chandu story to see power of diversification:-

Chandu stock market journey.

So I give these top 10 scheme on basis of fund AUM and Diversification globally. ( as well as diversification among fund houses so I do not repeat any mutual fund company in this list).

How to invest:- If you easily save INR 10,000 in every month then Start a 1000 rupee SIP in each of scheme. 

but if you unable to save INR 10,000 in every month then here is the option:-

If you want to invest INR 1000 every month then start SIP only in scheme 1 .

If you want to invest INR 2000 every month then start  2 SIP (1000 each)  in scheme 1 and 2.

If you want to invest INR 3000 every month then start  3 SIP (1000 each)  in scheme 1,2 and 3.

If you want to invest INR 4000 every month then start  4 SIP (1000 each)  in scheme 1,2,3 and 4.....and so on.

Why I choose Dividend Schemes instead of growth schemes and in dividend option what to choose dividend payout or dividend re-investment?:-  I have a separate article on this issue so please visit this link to understand that why I recommended dividend schemes with dividend-reinvestment option:-

Dividend reinvestment Vs Growth option in mutual funds.

Top 10 mutual fund scheme (seniority wise ) for 2016:-

1.HDFC Equity Fund (D):- NAV 42.08 pay regular dividends since 1999 largest AUM diversified equity fund.

2.Reliance Japan Fund  (D):- See more details here:-

Reliance Japan fund review

3. ICICI Prudential Dynamic Plan (D) 

4.Religare Invesco Pan European Equity Fund (D):- Read more details here:-

Religare Invesco Pan European Equity Fund Review 

5.Franklin India Prima Plus Fund (D) 

6.SBI Contra Fund (D) 

7.Mirae Asset China Advantage Fund (D):- Read more details here:-

Mirae Asset China Advantage Fund Review

8.Birla Sun Life Equity Fund (D) 

9.Axis Equity Fund (D) 

10.DSP BlackRock US Flexible* Equity Fund (D)

 

Recommended reading:-

How to book profit in SIP

10. Discloser:- Author is not a registered mutual fund adviser but I Mahesh Chander Kaushik author of this research report is an existing research analyst and passed NISM certification for research analysts. I am also registered under SEBI(RESEARCH ANALYSTS) REGULATIONS, 2014 ( SEBI Registration Number INH 100000908 ) hereby disclose about my financial interest in the subject company and the nature of such financial interest:- 1 I am personally hold units  of reliance japan fund and  Mirae Asset China Advantage Fund and continue  SIP in these funds so my personal interest is included in both of fund but not hold  Religare Invesco Pan European Equity Fund 2. Me and my associates or relatives have not any actual/beneficial ownership of one percent or more securities of the subject company (  Religare Invesco Pan European Equity Fund ,reliance japan fund and Mirae Asset China Advantage Fund  ). 3. Me and my associates or relatives have not any other material conflict of interest at the time of publication of the research report. 4. Me and my associates or relatives have not not received any type of compensation from the subject company(  Religare Invesco Pan European Equity Fund ,reliance japan fund and Mirae Asset China Advantage Fund ) in the past twelve months. 5. I am not served as an officer, director or employee of the subject company( Religare Invesco Pan European Equity Fund ,reliance japan fund and Mirae Asset China Advantage Fund ). 6. I have been not engaged in market making activity for the subject company( Religare Invesco Pan European Equity Fund, reliance japan fund and Mirae Asset China Advantage Fund  )

Time to Start SIP in Religare Invesco Pan European Equity Fund @ 8.96

Respected Readers,

Namaskar

I am happy to announce that market again prove my estimate about NFO.

This time NAV of Religare Invesco Pan European Equity Fund fall below 9 as I estimate earlier.  

When NFO of Religare Invesco Pan European Equity Fund come on January 2014 then I publish an article on this blog, where I told you that "I did not advice you to invest directly in NFO ( New fund offer) because as my past experience say mutual fund NAV down after new NFO in 90-98% NFO So we will start a SIP in this fund if fund NAV is down below 9 after his listing."

and after 2 year of this NFO my estimate is proved and now Religare Invesco Pan European Equity Fund NAV is down at 8.96.

Must read this earlier article here:-

How to Invest in European Markets with Indian Mutual Funds?

So now we start a INR 1000 per month SIP in this European mutual fund which will diversified our investment in European markets.

I think you already read my other diversified options here:-

Indian  mutual fund for invest in China

Indian mutual fund for invest in Japan

Enjoy your SIP at a lower price where NFO investors face  10%  fall on his investment we have a chance to enter in this fund at 10% discount.

But still I advice again that make only SIP instead of lumsum investment.

Regards

Mahesh Kaushik

10. Discloser:- Author is not a registered mutual fund adviser but I Mahesh Chander Kaushik author of this research report is an existing research analyst and passed NISM certification for research analysts. I am also registered under SEBI(RESEARCH ANALYSTS) REGULATIONS, 2014 ( SEBI Registration Number INH 100000908 ) hereby disclose about my financial interest in the subject company and the nature of such financial interest:- 1 I am personally hold units  of reliance japan fund and  Mirae Asset China Advantage Fund and continue  SIP in these funds so my personal interest is included in both of fund but not hold  Religare Invesco Pan European Equity Fund 2. Me and my associates or relatives have not any actual/beneficial ownership of one percent or more securities of the subject company (  Religare Invesco Pan European Equity Fund ,reliance japan fund and Mirae Asset China Advantage Fund  ). 3. Me and my associates or relatives have not any other material conflict of interest at the time of publication of the research report. 4. Me and my associates or relatives have not not received any type of compensation from the subject company(  Religare Invesco Pan European Equity Fund ,reliance japan fund and Mirae Asset China Advantage Fund ) in the past twelve months. 5. I am not served as an officer, director or employee of the subject company( Religare Invesco Pan European Equity Fund ,reliance japan fund and Mirae Asset China Advantage Fund ). 6. I have been not engaged in market making activity for the subject company( Religare Invesco Pan European Equity Fund, reliance japan fund and Mirae Asset China Advantage Fund  )