Mutual Funds
What are Mutual Funds?
It is one of the most viable investment options for the common man as it offers an opportunity to invest in a diversified and professionally managed basket of securities at a relatively low cost.
Types of Mutual Funds
Equity or Growth Funds
Equity or Growth funds invest predominantly in equities i.e. shares of companies. The primary objective is wealth creation or capital appreciation. They have the potential to generate higher returns and are best for long term investments. Examples of Equity funds are Large cap, Mid cap, Small Cap, Multi cap, Sector and Tax-Saving funds, etc.
Income or Bond Funds
Income or Bond Funds invest in Fixed Income Securities, like Government Securities or Bonds, Commercial Papers, Treasury Bills, Commercial Paper, etc. These are relatively safer investments and are suitable for Income Generation. Examples would be Liquid Funds, Short Term, Floating Rate, Corporate Debt, Dynamic Bond, Gilt Funds, etc.
Hybrid Funds
These invest in both Equities and Fixed Income, thus offering the best of both, growth potential as well as income generation. They are also known as asset allocation funds. The presence of equity components in the portfolio offers the potential to earn higher returns. Examples would be Aggressive Balanced Funds, Conservative Balanced Funds, Pension Plans, Child Plans and Monthly Income Plans, etc.
Benefits of Mutual Funds
Diversification
You get exposure to a variety of shares or fixed-income instruments that give you a more diversified portfolio.
Fund For Everyone
With currently 2000+ active schemes, you may find the fund that matches your risk, budget and goal preference.
High Liquidity
Whether you buy an open-ended or close-ended mutual fund, there is always a high level of liquidity.
Cost-Efficient
You can start investing as low as Rs. 500, without paying any brokerage or security transaction fee.
Tax Benefits
Get tax exemptions on your investment under different sections of the Income Tax Act.
Safe & Transparent
Mutual Funds are not only safe but also give you full access to track all the data related to your investment.
