what are Mutual Funds
Mutual Fund Investor Guide
Mutual funds (MFs), in their most basic sense, gather money from investors who have common financial goals and then invest it on their behalf in multiple assets to meet set objectives. MFs are one of the most suitable investments for individuals as they offer them a chance to invest in a diverse basket of assets at a low cost.
Mutual funds in India began in 1963 with the creation of Unit Trust of India (UTI), under the initiative of the Central Government and the Reserve Bank of India (RBI). At the time, the objective was to attract small investors and introduce them to market investments.
Investors put their money into MFs because they can benefit from diversification across several assets with even meagre investments.
Investing in equity, debt etc is complex and not all retail investors are adept at taking investing decisions. Mutual funds employ professionals and experts to manage your investments.
What’s more you can, investing in mutual funds is easy, and you can invest as small as sum as Rs 500. One of the best ways of creating long-term wealth is by investing in MFs through a systematic investment plan or SIP.
Mutual Fund Investment Plan by Angel Bee
Online mutual fund investments are fast and convenient. All you need to do to invest in mutual funds in India online is be compliant with KYC or Know Your Customer norms. To complete KYC just enter your Aadhaar Number, followed by your PAN number, mobile number, and the OTP that is sent to your registered cell number, and you’re good to go.
Once you’re registered, you can buy funds directly through our system. We will ask you for your goals and suggest a personalized list of funds to choose from.
SIP in Mutual Funds
Start small (as low as Rs 500)
Great for long-term wealth creation
ELSS Mutual Funds
Save tax under 80c
Lower lock-in than other tax-saving investments
Equity mutual funds
Potentially higher returns than other asset classes
One of the best ways to participate in equity
Diversify across stocks with small investments
Top Mutual Funds for India 2018
Mutual funds come in many sizes and types. Two broad categories of mutual funds are open-ended schemes and close-ended scheme. Open-ended schemes are continuously available for subscription and repurchase, while close-ended schemes can only be bought during the initial offer and have a stipulated maturity period, usually between five and seven years.
Mutual Fund schemes are also categorised depending on investment objective such as growth/equity-oriented scheme, income/debt-oriented scheme, balanced funds, liquid funds, gilt funds, and index funds. Of these debt-oriented schemes and gilts carry lower risk, as they are associated with instruments such as bonds, corporate debentures and Government securities. Equity funds have the potential to deliver higher returns but at relatively higher risk.
Online mutual funds allow you to complete transactions sitting at home. Like we mentioned, all you need is to comply with the KYC norms and we will help you prepare your investment portfolio.
Everything you need to know about Mutual Funds
MFs are a tax-efficient way of making your savings grow. It is ideal for those looking at long-term wealth creation to achieve your financial goals. MFs are considered as one of the best options for those who do not have an expertise in the stock market but still want to benefit from its potential returns.
Mutual funds in India can be overwhelming because there are over 2,500 schemes to choose from. Our guides will help you take an informed decision about investing in mutual funds
Why invest in mutual funds
A smart option
Investing in mutual funds is less risky than directly investing in the stock market. The associated risk while investing in MFs is relatively low as most schemes spread the investment in multiple assets and thereby reduce risk. This makes investing in mutual funds a smart investment option. Moreover, mutual funds are regulated by Securities and Exchange Board of India, which means all investments made in the name of MFs must comply with SEBI guidelines.
Mutual funds are managed by expert fund managers, which makes it a good option even for first-time investors. Besides, mutual funds employ the latest research tools and technologies to ensure your investments are well-managed. You needn’t worry about tracking the market every day and taking decisions on when to buy and sell. The mutual fund will do all that for you.
Although MFs are subject to market risks, the risks are diversified. Even if you are investing as low a sum as Rs 500 in a mutual fund, the amount is diversified across the fund’s entire portfolio. You also have the option of choosing a scheme that is aligned to your risk appetite. For example, you can choose a liquid fund, if you have low risk appetite; and a midcap fund if you are looking for returns albeit at higher risk.
Invest via SIP
MFs give people the option of investing in small amounts regularly, instead of paying a lump sum. This is good news for retail investors who cannot afford to make large investments in one go. Systematic investment plans (SIPs) allow you to grow your wealth steadily with investments as low as Rs 500. SIPs also help you reduce the risk of volatility. However, if you do have a large sum of money you can invest a lump sum amount.
MFs are a highly liquid investment, which means you can sell your holding at any time and immediately receive your money (within 3 to 4 business days). Selling mutual funds is easy, and you can do it in a few clicks online, and your funds will be directly credited into your bank account. If you want even higher liquidity, you can invest in liquid mutual funds, where you can get your money out in one business day.
Equity-linked mutual funds (ELSS) offer investors tax benefits under section 80c of the Income Tax Act. You can invest up to Rs 1.5 lakh in ELSS under 80c. The amount you invest is deducted you’re your total income for tax calculations. Depending on your tax bracket, you can save up to Rs 45,000 a year in tax by investing in mutual funds.
Mutual funds are so convenient to buy and sell. You can buy and sell them in a jiffy online. There’s no need to fill forms, submit photocopies and so on. Once you have done your Know Your Customer (KYC) formalities, all you have to do is just log in and buy or sell. It’s so much easier to reshuffle your portfolios according to the demands of the situation. For example, if you feel that the equity market looks promising, you can just sell your debt funds and invest the proceeds in equity.
A wide range of options
Most people make the mistake of equating mutual funds with equity funds. But there’s so much more to them than equity. Of course, mutual funds are a great way of investing in the equity market, but you can also choose between debt funds, liquid funds, income funds and many more. Even among equity funds, there are different offerings to meet every investment goal and risk appetite. There are large cap funds, which provide stable returns and less risk, and small cap and mid cap funds, which involve more risk, but can offer better returns in the longer term.
Economies of scale
By investing through a mutual fund is you get the benefit economies of scale. This is because mutual funds buy large amounts of equity and debt from the market for their various schemes. Because of these large quantities, transaction costs per unit are much lower. For example, equity funds will be able to get lower brokerage costs while transacting in equity, and debt funds can negotiate better interest rates with borrowers. These reduced costs are passed on to investors who buy mutual funds.
Access to more avenues
Investors in mutual funds have more access to varied investment avenues. For example, a debt fund invests in fixed income instruments like government bonds and treasury bills that are sold wholesale to institutional investors and are inaccessible to retail buyers. By investing in a debt fund, you are able to put your money in instruments that offer a high degree of safety and stable returns. Private equity capital funds can invest in fast growing companies about which retail investors may have little knowledge.
Easy to track It’s easy to track the returns you are earning from your mutual funds. Information about them is publicly available and you can track mutual fund performance on an everyday basis. You can check how your fund has been faring over various time periods, like a month, year, or even ten years. You can compare performance with other funds and check whether your investments are performing in the way you expect them to do. If they aren’t, there are other funds in the sea.
Get better returns from mutual funds
Mutual funds are one of the best investment options in terms of returns. Over the years, the best mutual funds have outperformed other asset classes such as fixed deposits and gold. What’s more, you can choose a mutual fund based on the kind of returns you want and the risks you are willing to take.