Mutual Fund

Mutual Fund


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Overview

“A mutual fund is a professionally-managed investment scheme, usually run by an asset management company that brings together a group of people and invests their money in stocks, bonds and other securities”

All the mutual funds are registered with SEBI. They function within the provisions of strict regulation created to protect the interests of the investor.

MUTUAL FUND CAN BE REWARDEDING INVESTMENT CHOICEFOR YOU
  • Mutual Funds offer diversification in your investment Portfolio.
  • Mutual Funds are managed by professional fund managers.
  • Mutual Funds offers various options to invest according to individual risk apetite
  • Mutual Funds encourage systematic investing and withdrawals.
  • Mutual Funds allow automatic reinvestment.
  • Mutual Funds are transparent.
  • Mutual Funds offer liquidity.
  • Mutual Fund performance is tracked and recorded.
  • Investing in Mutual Funds is safe.
  • Mutual Fund offers Tax benefits. Investment in specific ELSS schemes qualify for income tax deductions.
WHY MUTUAL FUND IS BETTER THAN OTHER INVESTMENT PLAN
Fixed deposit interest rate somewhere around 5-7% for investment of one year. That too are not tax free returns.

Gold in an investment option Indian investor has always remained obsessed with. During this period of 15 years between 2002 to 2017, gold has gone up from Rs. 5300 (10 gms) to around Rs. 29,600 resulting in 13.2% CAGR way below average return given by diversified equity funds. This too has come on a back of recent rally witnessed in gold in last 5 years, otherwise between 1997-98 to 2007-08, gold has delivered only 8.7% return.

Mutual Fund has given better returns as compared to FD and Gold in last 15 years. Average of Mutual Fund schemes in last 15 years have given a return of 21.75% as on 31st Mar 2017. If we talk about lumpsum investment, Rs. 1 lac invested in these funds would have grown to Rs. 19.14 lacs in 15 years period. The average SIP return of 45 diversified equity funds is 18.53% over last 15 years. So someone who had started with SIP of Rs. 10,000 in April 2002, has accumulated Rs. 83.89 lacs as on 31st March 2017 on an investment of Rs. 18 lacs over the 15 years period.
Fixed deposit does not allowed withdrawal before maturity. If withdrawal is necessary,you will have to break your FD.Breaking a fixed deposit, result in lower rate of interest and payment of penalty .But in Mutual Fund any amount can be withdrawn from debit mutual fund account .Accounts can be withdrawn at any time, and the mutual fund continues to function on the remaining amount.There is no loss of interest rate.
Fixed deposit attracts a high rate of tax. Up to 30% depending on your personal tax rate. But Mutual Fund Attract the same rate of tax than FD’s during the first year. But from second year diversified equity funds offer tax free returns. Mutual Fund is the investment for those who can afford the risk in order to enjoy the slightly higher reward (when compared to fixed deposits). The primary advantages here are that you can liquefy your investment fast and at minimal cost, and can save on tax – at the cost of a risky investment platform.
Systematic Investment Plans let individuals invest small amounts on a regular basis to avail benefits of rupee cost averaging. It’s an alternative to those who cannot invest lump sum amounts thereby appealing to investors across income levels. Mutual funds accept initial investments as low as Rs.500.