Everything you need to know about Mutual Funds
It is acknowledged that mutual funds are one of India's best investment avenues. Read about Mutual Funds, how they are operating, how they profit, and how to invest.
What are Mutual Funds?
A Mutual Fund (MF) is created when money is invested in the purchase of corporate shares, securities or bonds purchased from different shareholders. Shared by thousands of investors, investment in mutual funds is actively managed by a qualified fund manager to receive the highest returns possible. This is how mutual funds operate, not just in India, but throughout the world.
The best way to grow your wealth is to invest in mutual funds. The experience of the fund manager is an important factor to consider when choosing the fund. All Mutual Funds are registered with the Indian Securities Exchange and Board (SEBI) and are therefore free for your investment.
Why Mutual Funds?
Investment from the Mutual Fund offers various advantages making them the most lucrative investment choice.
Expert Money Management
Mutual fund companies have fund managers to pick the company shares, markets, and equity papers to invest in the pooled mutual fund portfolio. It would be made by keeping in mind the interest of the investors.
Lock-in Period
The Lock-in duration is the time when investors are unable to withdraw their investment from the Mutual Fund or sell their units from the Mutual Fund. This differs with the Mutual Funds. For general, open-ended funds have no lock-in period, while tax-saving funds (ELSS) have a 3-year lock-in period
Low Cost
Investment in mutual funds is a very affordable option for those willing to invest in small amounts. MF houses charge a small fee called the cost rate, ranging from 0.5 percent to 1.5 percent of the investment in the Mutual Fund. As per SEBI regulations, the expense ratio can not exceed 2.5 percent.
Flexible Tenure
The EEquity-linked savings scheme (ELSS) is the only MF scheme with a three-year lock-in duration. It offers investors more flexibility in terms of their short-term or long-term financial goals. Investing over a certain period of time makes it easier to decide how and when to invest.
SIP Option
You should invest in a Systematic Investment Plan (SIP) if you don't have a lump sum to invest. Our Fundexpert experts have chosen the best mutual fund to invest according to your needs. The best thing about investing with Fundexpert in mutual funds is that you can spend an installment as small as Rs 500.
Flexibility to Switch Funds
A good investor knows when to move funds to keep up with the market or stay ahead. There are various MF schemes for exchanging capital. The fund manager will have an eye on the market while not being burnt by market volatility to ensure the best returns.
Diversification
MFs invest in mitigating risk through different asset classes and company shares. When one asset class underperforms, the loss will be negated by gains from other asset classes. Nonetheless, it is advised not to invest in too many (more than 5) because the quality of all avenues can be difficult to monitor.
Liquidity
This offers flexibility to invest in mutual funds. At any time you are allowed to withdraw your investment. There is no need to explain your decision or to hunt for a buyer. All you have to do is put an application with your fund house and they'll credit the money to your bank account within 3-7 working days.
Ease of Tracking
Investors may not have the time to analyze their MF investment's results. MF houses provide investors with daily statements to make things simpler, making it easy to track fund(s) efficiency.
Handpicked Funds
Among other items, there are specific MFs focused on investment goals, individual risk tolerance, markets, and fund size. Given the number of options available, investigating and evaluating the quality of various funds can be a difficult task. Fundexpert has chosen the best mutual fund that suits your profile.
Ease of Trading & Transaction Experience
It is quite easy to buy, sell and redeem fund units at the current market price per unit (NAV). All you need to do is apply to the MF House and the fund manager will take care of the rest. The fluid nature of MFs in an emergency situation will benefit you.
Tax Efficiency
Investing in ELSS provides a twin benefit of tax deductions and accumulation of wealth. ELSS investments are liable under Section 80C of the Income Tax Act, 1961 for tax deductions. You can deduct up to Rs 1,50,000 per year. ELSS provides the highest return on all Section 80C apps
Investment Safety
The Securities and Exchange Board of India (SEBI) and the Indian Association of Mutual Funds (AMFI) are responsible for all MF houses. All SEBI and AMFI are government bodies and you can therefore find your investment in the Mutual Fund as secure as bank deposits.
Investments Based on Goals & Focus Sector
With a financial goal to achieve, each shareholder invests in MF. There are funds with different risk factors that help you achieve goals of all sorts.
Types of Mutual Funds
Equity Funds
Equity funds invest mainly in various companies' stocks. If share prices increase, your investment in equity funds will make a profit, while they suffer a loss if share prices fall. Investing in equity funds is suitable for those who stay invested for a prolonged period of time and are comfortable with moderate to high risk.
Solution Oriented Funds
As per SEBI's scheme categorization, ' solution-oriented schemes ' are one of the items the AMCs can run. Such plans currently cover priorities such as retirement and education for children. "This is a new class of mutual fund equity schemes. Such schemes were historically known as general equity schemes or balanced schemes. In the future, we expect more initiatives to be introduced by AMCs for ' Child's Marriage ' or ' Dream Home ' goals in a solution-oriented category, "said Prateek Mehta, CEO and co-founder of Upwardly.in.
Others Funds
1. ETF mutual funds create a portfolio that emulates the index issued.
Thus it is predicted that these funds will yield similar returns as per index.
2. FOF funds create another mutual fund portfolio. Investment in other funds is made in international market
participation or theme-based investments.
