A mutual fund is a properly managed investment fund that gathers money from many investors to invest in securities. Securities include stocks, money market instruments, bonds, and other assets. A mutual is the fund’s portfolio maintained to meet the investment goal. Mutual Funds are the easiest method to grow your wealth.
MF’s are registered with the Securities Exchange and Board of India (SEBI) and thus, your investment is safe.
Types of Mutual Funds
Fixed Income funds
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Why Mutual Funds?
Expert money management
Mutual fund companies have fund managers to choose the sectors, shares, and debt papers in which the investment would be invested. This decision is made by keeping the investors’ interests in mind.
The Lock-in period is the duration in which investors cannot withdraw or sell their investment.
Mutual funds are a very affordable option that wishes to invest in small amounts.
Reduce Tax Liability
The benefit of mutual funds is you can save income tax. You can reduce your taxable income by Rs 1.5 lakh under the Income Tax Act – 1961.
Invest through SIP
If you don’t have enough funds to invest, then you must invest in a Systematic Investment Plan (SIP).
Flexibility to switch funds
A good investor knows when to switch funds to stay ahead of the market.
Investment based on goals
The investor invests in Mutual funds with a financial goal to achieve
Mutual funds invest in many asset classes and company shares to mitigate risk.
Mutual Funds offer liquidity. Because you are allowed to redeem your investment at any time.
Mutual Fund comes with three years of the lock-in period. So it gives investors flexibility in their financial goals.
Investing in MF offers two benefits such as tax deductions and wealth accumulation.
Ease of trading
Buying, selling, and redeeming fund units at the current market price is quite simple.
Ease of tracking
MF provides investors regular statements to track the performance of the funds.
Mutual Fund investment is 100% safe. So you can easily rely upon it.
When To Invest?
Factors to consider before investing:
- You must have enough funds to invest.
- Duration of Investment
- Research about the Market condition
- Expected return
Advantages of Investing in Mutual Funds
- Professional Management of Money
- Economies of Scale
- Tax- Saving
- Pocket Friendly
Mutual Fund Eligibility
Anyone can invest in mutual funds. The smallest investment amount is Rs 500. Indians and NRIs can invest in mutual funds. You can also invest in the spouse’s name or child. Apart from this, partnerships, LLPs, Trusts, and Companies can also invest in mutual funds.
Frequently Asked Questions
For evaluating your tax liability, listed stocks or equity mutual funds are considered long-term if the holding period is one year. if we talk about other investments, the limit is of three years.