Making Mutual Fund Investments
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Like most people, you have hopes, dreams, and life goals for yourself and your family. These might include buying a home or business, saving for college education for your children, taking a dream vacation and retiring comfortably. But the pressures and complexities of everyday life can make setting and achieving financial goals difficult. Yet, doing so is vital if you are to enjoy the benefits of a secure financial future. That’s why it makes good sense to have a financial plan in place.
Mindsure provides detailed information on performance of various schemes including latest NAVs and fund comparisons. You will find updates on Factsheet, Portfolio, Dividend, Exit Load, NFO and AUM of all the Indian mutual fund schemes on a regular basis. Our SIP, STP and SWP calculators will help you plan financial goals. Mutual fund news and thoughts keep you updated about the mutual fund industry besides offering useful knowledge and insights on various aspects of domestic and global economies.
What are mutual funds?
A Mutual Fund (MF) is formed when capital collected by various investors is invested in purchasing company shares, stocks, or bonds. Shared by thousands of investors, mutual funds’ investments are collectively managed by a professional fund manager to earn the highest possible returns. This is how mutual funds work, not only in India but, anywhere in the world.
Allows to invest in small amounts
Investing in Mutual Funds is the easiest way to grow your wealth. The fund manager’s expertise is an important factor to consider while choosing the fund. All Mutual Funds are registered with the Securities Exchange and Board of India (SEBI) and hence, your investment is safe.
Benefits of Investing in Equity Funds
- The benefits of investing in mutual funds are many:
Expert money management
- Systematic investments
Taxation of Equity Funds
As mentioned earlier, short-term capital gains (STCG) are taxable at the rate of 15%. The Union Budget 2018-19 brought back the long-term capital gains (LTCG) tax on equity holdings. It is applicable at the rate of 10% if the gains exceed Rs 1 lakh a year.
SIP or lumpsum- which is better?
Lump sum investments are apt for those individuals who have a considerable sum to invest. However, not many investors invest via the lump sum route.
b. Systematic Investment Plan (SIP)
A SIP allows you to invest a fixed sum on a period basis. The frequency of SIP can be weekly, monthly, and quarterly. You give a mandate to the fund company to deduct the investment from your bank account.
SIPs give you the benefit of rupee cost averaging. This means that when the markets are high, you will be allotted fewer units. And when the markets are low, you will get more units for the same amount. This way, you invest at different levels of the market. SIPs also inculcate financial discipline and make mutual funds affordable for all.
Types of mutual funds
Mutual funds are broadly classified into three categories based on their investment traits and risks involved. Understand all mutual fund types and analyse them to check if your requirements would be served by investing in a particular type of mutual fund. Following are the types of mutual funds:
Equity funds primarily invest in shares of different companies. Your equity funds investment would make a profit when the share prices surge, while they suffer a loss when the share prices fall. Investing in equity funds is apt for those who stay invested for an extended period and are comfortable with moderate to high risk.
Debt funds primarily invest in fixed income government securities such as treasury bills and bonds, or reputed corporate deposits. Investing in debt funds is less risky than equity funds. Debt Funds are apt for those who are risk-averse and looking for a short-term investment.
Balanced or Hybrid funds
As the name suggests, balanced or hybrid funds invest in both equity and debt instruments to balance the risk and maintain a specific rate of return. The fund manager decides the ratio to reap the best of both debt and equity instruments.