401K Financial Planning

sanko asked:

(Q1)
Everybody talks about investing money in Mutual Fund.
suppose, you want to invest some money in Mutual Fund (CLOSE ENDED for 3 years say) (say in HDFC Tax saving Mutual Fund).

How you will be paid your return after 3 years ?

does the Mutual Fund company AUTOMATICALLY sends your profit(if any) by cheque to your home address ?

who pays the return(profit) ? i am confused, how one will get the return(profit) ?

(Q2)
Now suppose,

suppose, you want to invest some money in Mutual Fund (OPEN ENDED i.e you can withdraw money at any time…right ?) .

now, say you want to discontinue after 3 Months.

what you have to do ? i have read …you have to “sell the Mutual Fund” ….but selling to whom ? how do i get the customer to sell?

is it necessary to sell ?

if i dont sell but want to withdraw what will happen ?

very much confused.
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can you please clarify my some more doubts ?

which is better mode of investment ?

(1)with dividend or without dividend ?
(2)close ended or open ended ?
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i have also read a fact , that suppose you invested some mone to a MF fund company. but the MF company ruined and could not survive….thats means, you are not getting any profit…right ? your money is gone….correct ?

well ok….but the most stunning fact and dangerous thing i have read is that you have to sell your furnitures,TVs,Computers and other household things to pay off the MF company . because , they say,…you too have the liability as the company ruins so you also ruin.

is this fact true ?


Question posted courtesy of: Joy