MOST of us have an inner rebel. That's why often fall for the guy mother warned us against. Or continue smoking even when told not to.

So, it's no wonder that when mutual fund advertisements worth millions of dollars, tell us to 'Please read the offer document (OD) carefully before investing', we still don't! This is understandable; after all it's a 100-page document filled with jargon. But in the long run, you will be the loser, if you don't.

The Securities and Exchange Board of India (SEBI) have even come out with an abridged version called the Key Information Memorandum, which stipulates standard sections and disclosures in all ODs.

• First time mutual fund buyer? Find out what you should do.
  
  

An OD is critical because it tells you whether your money is in the right hands, at the right place and at the right time. Your financial advisor will have a copy, and the company web site should have it online, too.

If you still don't want to read the whole document, take the easy way out. wealth scopes out 10 must-reads in the OD.

1. Date of issue

Verify that you have the latest edition of the OD (an OD must be updated once a year, at least).

2. The minimum investment

Mutual funds differ both in the minimum initial investment required, and the minimum for subsequent investments.

For example, equity funds may stipulate Rs 5,000, while institutional premium liquid plans may stipulate Rs 10,000,000 (Rs 10 crore) as the minimum amount.
Illustration: Abhijeet Kini

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e-mail: Ajay Bagga

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