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

monaya asked:

If stock prices are volatile, then what makes stock prices go up or down?

Many people say to look at the financial history to know if you should invest, but in many cases the stock price is way over priced for what the company is actually worth with respect to their financial statements, book value, earnings per share, etc…

How do you know when to invest in a stock if even financial statements don’t reflect a company’s stock price? I can’t understand how you know when to invest? or when you can truly make a basis that you think the stock price will go up or down?
For example NetSuite just announced strong revenue results and that revenues exceeded estimates. In the same announcement, the CEO also mentioned slower growth in 2008 and then the stock plummeted by 10%.

If the company announces progressive financial results why would the stock price go down? Again, this indicates that the market is always driven by emotion than financial results.


Question posted courtesy of: Nicholas