Mutual Funds | Mutual Funds Sahi Hai | Diverse Investment Plan | Mutual Fund Uti| Which Mutual Fund is Best | Mutual Funds India | Mutual Fund Meaning | Mutual Fund Types | Mutual Fund SBI
What is Mutual Fund?
Mutual Funds Sahi Hai
For most of us, investment always has been having fixed deposits, buying gold, or investing in real estate but there is another form of investment, which is called Mutual Funds.
Let’s understand in a layman way when many individuals pulling in their money for a common purpose is called a mutual fund and the purpose here is to benefit from the capital market.
How it works?
Now, these individuals don’t have the required knowledge, not the time to manage this pool but they want to benefit from the capital market.
An asset management company appoints a fund manager to take care of this fund. The manager is a knowledgeable professional who continuously monitors the market and buys corporate or government bonds, Treasury bills, stocks, and various kinds of deposits to satisfy the investment objective.
This fund can be various investment objectives, each of such objective depends upon your risk-taking capacity with the time horizon.
Types of Funds
Mutual Funds India are broadly divided into three categories :
- Equity: fosters equity for people who want to invest only in equities and get the maximum benefit of the stock market.
- Debt: Another is debt, for people who want to invest only in floating money or liquid money.
- Balanced Fund: The balanced fund, for people who want to have a mix of both equity as well as debt.
So, what we’ve understood so far is how a pool of money managed by a knowledgeable professional is called a mutual fund. Each mutual fund will have an investment objective.
We went through the broader classification of mutual funds.
Type of investment:
There are two ways to invest in any mutual funds:
- The First way is called lump sum investment when you take a certain amount of money and you invest the entire amount in one go. Example: you have 1 Lac as savings in your account and you invested it in one go. these types of investments are called lump sum investments. These are generally very useful for senior citizens and for people who generally have a large sum of money lying with them.
- The second type of investment is called SIP (Systematic Investment Plans). In SIP you don’t need to invest a large sum of money in one go, what you need to do instead is committed to investing a small amount of money every month for a certain number of years. These amounts can be as low as ₹100, ₹500, ₹1000, ₹5000, or whatever suits the needs and the requirements.
These kinds of investments are actually very useful for salaried employees, homemakers, and students as we generally don’t have a large capital lying around us but because we receive our salary or financial help every month, we can always take out a small amount of money and invest it.
Will, it helps in tax savings?
I want to talk about a particular type of fund i.e. called ELSS or Equity-linked savings schemes.
These types of funds come with a lock-in period of three years so whatever money you invest in these funds it will be locked in for three years and you can withdraw that money only after this particular term is over.
This starts with about three years can go up to as high as five years.
The major benefit that these funds offered is that you will get a high return rate as well as up to 1.5 lacs rebate as a tax deduction under Section 80C.
I think some misconceptions also need to be clear right away there are two big misconceptions that I think most people have about mutual funds and I want to talk about them right now:
The first big misconception #1 is that everyone thinks they need a Demat account to start investing in mutual funds this is not true. Demat account is not needed for investing in mutual funds you just need to do a few KYC steps that are mandatory and there also mandatory for our protection.
The misconception #2 is that mutual funds are going to make you rich overnight this again is not going to happen. Mutual funds are subject to market risk and while they do offer a great rate of return they also come with their fair, share of risks so make sure that you do your calculations understand the risk profile under which you will sort of fall.
Conclusion: Sai hai!
In the above categories, we understood the risk appetite and only then make your investments.
Most of the Mutual Funds India will start giving you positive returns only at the end of 2nd year so make sure that you do your research to understand all the requirements and only then start investing in mutual funds.
1. How should I start?
The very important question of how we start investing in mutual funds there are many ways:
a. you can directly do your research, online study different funds their performances individually, and decide on which one to go.
b. while doing your research please look for the following factors:
Past performance, Yearly average return on investment, the risk profile of the funds.
c. Check the fund manager profile and also his/her background once you’re satisfied with your research online.
d. Once you have picked the fund that suits your needs you can go on the fund’s website and finish the process.
e. There’s also an easier way of doing this there’s are many apps like Zerodha, Groww, PayTM Money, Krack, My Cams. which you can download through the App store right away and you can do all these steps directly on that.
2. How can I pick the right fund?
Somebody who likes investing but complete beginner and does not want to get into the technicalities to pick the right fund then here u go:
App also has a feature where you can just set a particular group which you need to invest in right away. You can select based on your budgeting and the risk factors.(Mutual Funds Sahi Hai)
3. How can I plan?
There is a simple rule just set a goal for your investment plan like:
a. Buying a car in 3 years: which you might need to invest ₹15K SIP, 12% rate, 3 Yrs = ₹6.5 lacs
b. Buying a house in 10 years: which you might need to invest ₹25K SIP, 12% rate, 10 Yrs = 60 lacs.
c. Planning for retirement after 30 years: invest like ₹12K SIP, 12% rate, 30 Yrs = 4.2 Cr.