Quick Beginner Guide to Mutual Funds Investment in India

15 May 2021 1:40:PM

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Mutual funds are considered as one of the best methods for long term wealth creation by investors. It is a tax-efficient way to make your savings grow. Those who have no expertise in stocks can benefit through the potential returns gained in mutual funds. Today, mutual fund investment is a much better option than fixed deposits and gold. Though investing in mutual funds is simple, many find the whole process too complex to comprehend and others perceive it as risky which it is not. Here’s a beginner’s guide to mutual fund investment in India which will give you a good idea of what are mutual funds, mutual fund types, and benefits of mutual funds.

Mutual funds can be understood as a process in which money is collected from different investors who have common financial objectives. The collected fund is then invested on their behalf in diversified assets at a low cost to meet the mutual financial target set by investors. The professional fund manager manages the mutual fund scheme in an effort to generate returns.

Mutual Fund Types:-

There are different types of mutual funds available for investors in India. Broadly speaking, mutual funds are categorized into:

Open-ended funds – Investment and redemption is possible at any time as there is no fixed maturity or lock-in period.

Close-ended funds – Investment can be done for a short period of time usually when NFO or New Fund Offer is launched. It has a fixed maturity period.

Interval funds – Investment and redemption can be done at pre-determined intervals or dates.

Depending on investment objective, mutual fund schemes are divided into growth/equity-oriented schemes, income/debt-oriented schemes, balanced funds, liquid funds, gilt funds, and index funds.

A wide range of mutual fund types is available based on the risk you are willing to take and the returns you are expecting. There are several best mutual funds to invest in SIP where you can invest a fixed sum in a scheme.

Why Choose Mutual Funds Investment?

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There are several benefits to investing in mutual funds than equities and other forms of investment. A few of them are briefly discussed below:

  1. A mutual fund is a smart investment option as the risk is low when compared to directly investing in the stock market. The security offered by banks is an advantage and schemes are spread in diverse assets.

  2. Professional and expert fund managers take care of the mutual funds. There is a whole team of board of directors, agents, accountants, auditors who monitor and make decisions using the latest technology and tools and also keeping investor objective in view.

  3. Mutual funds are diversified across the fund’s portfolio. This allows you to invest in funds that are high risk but great returns, low risk but low returns and so on.

  4. Investors can avail of tax benefits with Equity-linked Mutual Funds under section 80c of the Income Tax Act in India.

  5. Easily track the performance of the funds over a period of time. Compare with other funds and check if it is achieving the objectives. This quick guide on How to invest in mutual funds for beginners in India must have given you a good overview of mutual funds.

Therefore, do not wait anymore and start investing in mutual funds.

 

GEPL Capital is one of the leading full-service broking firm and top mutual fund distribution company in India, offering the best-performing schemes online. The readily available list of mutual fund recommendations and a highly qualified team of advisors and experts will show you the best mutual fund to invest in 2020 with high return possibilities. For more details, visit www.geplcapital.com.

 

A big thank you to Mediallianz Team

 

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