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A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective.

The mutual fund will have a fund manager who is also known as the portfolio manager and is responsible for investing the pooled money into specific securities (usually stocks or bonds) and collects the dividend or interest income.

The investment proceeds are then passed along to the individual investors.

Mutual Fund Companies

“A mutual fund is a professionally-managed form of collective investments that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities.”

When we invest in a mutual fund, we are actually buying shares (or portions) of the mutual fund and become a shareholder of the fund.
Mutual funds are one of the best investments ever created because they are very cost efficient and very easy to invest in (we don’t have to figure out which stocks or bonds to buy).

Common mutual fund companies are – Reliance Mutual Funds, LIC Mutual Fund, Fund Unit Trust of India, Tata Mutual Fund, SBI Mutual Funds and much more like these.

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Demat account is an account wherein you can hold shares of various companies in the dematerialized [electronic] form.
You can open a demat account with a share brokerage or a bank.

DeMat account

You should necessarily have a PAN card for opening such an account.

You can operate your account by giving the filled in delivery instruction slips provided for selling the shares in your account.

The shares you buy will get credited to your account a few days after you buy.

In India, a demat account, the abbreviation for dematerialized account, is a type of banking account which dematerializes paper-based physical stock shares.

The dematerialized account is used to avoid holding physical shares: the shares are bought and sold through a stock broker.

This account is popular in India. The Securities and Exchange Board of India (SEBI) mandates a demat account for share trading above 500 shares.

Various benefits for which Demat account is must are:-

• A safe and convenient way to hold securities;

• Immediate transfer of securities;

• No stamp duty on transfer of securities;

• Elimination of risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc.;

DeMat Account

• Reduction in paperwork involved in transfer of securities;

• Reduction in transaction cost;

• No odd lot problem, even one share can be sold;

• Nomination facility;

• Automatic credit into demat account of shares, arising out of bonus/split/consolidation/merger etc.

• Holding investments in equity and debt instruments in a single account.

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Dividends are payments made by a company to its shareholders.

Dividends

When a company earns a profit, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders of the company as a dividend.

Paying dividends is not an expense; rather, it is the division of an asset among shareholders.

Dividends Policy

There are various forms in which the dividends can be paid, some of which are :-

• Cash

Cash dividends (most common) are those paid out in form of cheques. This is the most common method of sharing corporate profits with the shareholders of the company.

• Stock

Stock dividends are those paid out in form of additional stock shares of the issuing corporation, or other corporation. They are usually issued in proportion to shares owned.

• Property

Property dividends or dividends in ‘in kind’ are those paid out in form of assets from the issuing corporation or another corporation. They are relatively rare and most frequently are securities of other companies owned by the issuer.

• Other

Dividends can be used in structured finance. Financial assets with a known market value can be distributed as dividends.

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