Mutual Funds

start planning

What is Mutual Fund?

A mutual fund is a financial vehicle in which the investors pool money to invest in different markets and securities. Such funds are invested based on a particular fund scheme objective. Mutual fund investments are a great source to help you achieve your financial goals. Mutual funds aim to generate returns by investing in a diversified mix of assets, reducing the risk associated with single-stock investments. They cater to various risk profiles, from conservative to aggressive, offering options suitable for different investment objectives and time horizons.
 
Investing in mutual funds involves purchasing units of the fund, with each unit representing a portion of the total assets. As the fund’s holdings appreciate or generate income, investors benefit proportionally. The inherent diversification helps spread risk, and investors can choose funds aligned with their financial goals, risk tolerance, and preferences. In essence, mutual funds provide a convenient and accessible way for individuals to participate in investment planning, offering the potential for growth while minimizing the complexities associated with direct investment in individual securities.
Mutual Fund Grow

How Do Mutual Funds Work?

Under mutual fund investment, funds are pooled from multiple investors to invest in a diversified portfolio of stocks, bonds, or other assets. Professional fund managers make investment decisions on behalf of investors. Each investor owns shares proportional to their investment, and gains or losses are distributed among shareholders. This structure allows individual investors to access a diversified portfolio without directly managing investments, making mutual funds a popular choice for those seeking convenience and diversification in their investments.
 

Types of Mutual Fund Investment

Explore various types of mutual fund investment plans tailored to your financial goals. Trust our expert mutual fund advisors and consultants to guide you toward optimal investment strategies for long-term financial success.

1. Equity Mutual Funds:

Equity mutual funds primarily invest in stocks and equities of various companies. They aim to generate long-term capital appreciation by capitalizing on the growth potential of the stock market. These funds can be further categorized as:

Large-Cap Funds:
Invest in well-established and financially stable companies, offering relatively stable returns.
Mid-Cap Funds:
Invest in companies with moderate market capitalization, potentially offering higher growth compared to large-cap funds but with increased risk.
Small-Cap Funds:
Invest in small-sized companies, carrying higher growth potential and risk due to their volatility.

2. Debt Mutual Funds:

Debt funds invest in fixed-income securities like government bonds, corporate bonds, and other debt instruments. They aim to provide stable returns and are suitable for investors seeking regular income. Types include:

3. Gilt Funds:

Invest in government securities, considered low-risk due to the sovereign backing.

4. Corporate Bond Funds:

Invest in bonds issued by corporations, varying in risk based on the issuer’s creditworthiness.

5. Liquid Funds:

Invest in short-term money market instruments, providing high liquidity and safety.

6. Hybrid Mutual Funds:

Hybrid funds, also known as balanced funds, invest in a mix of both equity and debt instruments. They aim to balance risk and return, offering diversification. Subtypes include:

Conservative Hybrid Funds: Predominantly invest in debt with a small equity component, suited for conservative investors.

Aggressive Hybrid Funds: Maintain a higher equity allocation while balancing with debt, suitable for moderate risk-takers. Each type of mutual fund caters to different risk appetites, investment goals, and time horizons. Investors need to assess their financial objectives and risk tolerance before selecting a mutual fund that aligns with their
needs.

How To Invest In Mutual Funds?

Investing in mutual funds involves a systematic approach to ensure you make informed decisions that align with your financial goals and risk tolerance. Here are the steps to invest in mutual funds:
 

1. Mutual Fund Investment Planning:

Start by clarifying your investment goals and risk tolerance. Determine whether you’re investing for long-term wealth accumulation, short-term goals, retirement, or any specific purpose. Assess your risk appetite – whether you’re comfortable with higher risk for potentially higher returns or prefer lower risk and stability.
 

2. Research and Selection:

Research different mutual fund options that align with your investment goals. Look for funds that have a consistent track record of performance, low expense ratios, and well-managed portfolios. You can use online platforms, financial news, and investment advisors to gather information about the best mutual funds in India or your desired
region.
 

3. Choose the Right Type of Mutual Fund:

Based on your investment goals and risk profile, select the appropriate type of mutual fund. Consider factors like asset class (equity, debt, hybrid), investment style (large-cap, mid-cap, etc.), and thematic preferences.
 

4. Choose Investment Amount and Mode:

Decide on the amount you want to invest in the mutual fund. You can typically choose between lump-sum investment or a systematic investment plan (SIP), where you invest a fixed amount at regular intervals.
 

5. Monitor and Review:

Investing in mutual funds is not a one-time activity. Regularly monitor your investments’ performance and ensure they are in line with your goals. Periodically review your portfolio and make adjustments if necessary.
 

6. KYC Documentation:

Complete your Know Your Customer (KYC) documentation as mandated by regulatory authorities. This involves providing your identity proof, address proof, and other necessary documents to the fund house or intermediary.

Why Mutual Funds Investment?

We will delve into the advantages of mutual funds investment and why they are an excellent option for both novice and experienced investors.

Diversification of assets

Offer high liquidity

Safety and transparency

Lower cost

Tax benefits

Why Choose Fincart For Mutual Funds Investment Planning?

  • Fincart takes care of its client's investment requirements with the help of mutual fund advisors.
  • Availability of a mutual fund calculator that evaluates all the risks and rates of return associated with the investment.
  • We focus on extracting the benefits of mutual funds to meet their financial goals.
  • Regular supervision by mutual fund advisor and planner.

Mutual fund Investment planning process

  • The general investment planning process is followed to evaluate the product's suitability to the client's risk profile and actual requirements.
  • However, if a client insists on knowing just the mutual fund scheme, we first evaluate his risk profile and try to understand when he will need the money.
  • The system then picks the best-suited investment products based on the above two filters.

FAQ's on Mutual Funds

Mutual fund is a market linked product. As per SEBI, their returns cannot be guaranteed. Mutual funds are subjects to market risks.
The Net Asset Value (NAV) of a mutual fund is calculated by dividing the total assets by the number of units in the fund. The price of a unit is equal to this value. Once a day, NAV is calculated.

Under Section 80C, you can claim tax deductions of up to Rs 1.5 lakh on equity linked saving schemes (ELSS). You also get long term capital gains tax in equity funds which is 10% + 4% cess provided the gain in a financial year is over Rs 1 Lakh. Long term capital gains upto Rs 1 Lakh is totally tax free. Short term capital gains (if the units are sold before one year) in equity funds are taxed at the rate of 15% plus 4% cess.

Largely there are three types of mutual funds- 

  • Hybrid Funds: These invest in both Equities and Fixed Income, thus offering the best of both, Growth Potential as well as Income Generation
  • Equity or Growth Funds: These invest predominantly in equities i.e. shares of companies, and the primary objective is wealth creation or capital appreciation
  • Debt mutual fund: Bonds, corporate debt securities, money market instruments, and other fixed-income instruments that offer capital appreciation are examples of debt funds. Funds that invest in debt are also known as income funds or bond funds.
  • Professional Management 
  • Asset Allocation
  • Best Tax Saving Option
  • Schemes for Every Financial Goal 
  • High Return on investments
  • Easiest Form Of Investment 
  • Safety & Transparency
  • Liquidity