The proposal to scrap entry load for investors who approach mutual fund companies directly is laudable. (Free Entry, 20 September). Charging an entry fee is not very investorfriendly. Ideally, all costs should be met by the fund from the income it earns from deploying assets under its management. Shouldn’t the load be done away with altogether?
Kamal Thacker, Kolkata
Scrapping the entry load for investors who do not use the services of distributors, agents, etc, is a welcome move. But distributors and agents do play an important role. Operational assistance apart they can also advise investors about the suitabilty of a fund. So while it is important to protect investors from unscrupulous distributors who mis-sell funds, good distributors deserve to be paid for their services.
This refers to the story on loans against property (One House for all Loans, 6 September). I approached Punjab National Bank (PNB) to enquire about reverse mortgage for a senior citizen under my care. They informed me that under the scheme, the bank gave Rs 260 every month for a property worth Rs 1 lakh. No lump sum amount was paid. Please let me know if this is true. Dewan Housing does not offer this scheme in the city.
Ravichandran S, Chennai
At present, PNB does not offer lump-sum amounts under their reverse mortgage loan scheme. Only fixed monthly payments are made. The amount you receive depends on the valuation of your property by the bank. We have written to DHFL about your query and will get back to you with specific details once the company replies.
I have recently started reading your magazine and find it very informative. One of the Small Fortune sections (Bring Home the Movies, 31 May) said that by saving Rs 550 every month and investing it in a scheme that gives 10% annual returns, the money will grow to Rs 6.8 lakh in 25 years. Please explain this calculation.
Shyam Sivanandan
Our calculation is based on the simple arithmetic principle of compounding. We understand that it sounds magical, but remember that we assumed that you are investing this amount every month for 25 years. Longterm and disciplined investing gives rich rewards.
Most equity investors fret about volatility (Conquering Volatility, 20 September). But it is an opportunity to purchase stocks at lower prices. Your example of ITC, HLL and Ranbaxy should be helpful to worried investors who unecessarily panic during such times.
Bal Govind, Bareilly
Hasty decisions during market uncertainty benefits no one. The story explained how equity investors should remain focused on long-term goals during these times. Also, they can actually use temporary dips in the market to buy stocks at lower prices than usual.
This refers to the story on near-cash instruments (Better Than Cash, 20 September). What percentage of total savings should be invested in such instruments?
Dhruv Patel, Ahmedabad
Though there is no fixed percentage, about three months expenditure should be invested in near-cash instruments.
