Mutual Funds
5 Golden Rules of Mutual Fund Investing for First-Timers
Equity mutual funds invest primarily in the stock markets with an aim to generate higher returns
Debt funds are aimed at generating regular income for investors by investing in bonds, corporate debentures,etc.
Hybrid funds are mutual funds which invest in both equity and debt funds to acheive the mix of funds to achieve better balance, it is also known as balanced fund.
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Mutual funds refer to investment vehicles managed by professional fund managers. They pool money from several investors with common investment objectives and invest the same in equities, bonds, and other money market instruments. Companies or entities that offer mutual funds in India are known as Asset Management Companies (AMCs).
When you make a mutual fund investment, you typically buy mutual fund units at the prevailing “Net Asset Value” or NAV. Depending upon the performance of the underlying stocks or bonds, the NAV of a mutual fund unit increases or decreases, resulting in profits or losses.
You can invest in mutual funds in two ways - through a Systematic Investment Plan (SIP) or a lump sum. While an SIP allows you to make fixed investments in the same mutual fund scheme at regular intervals, a lump sum allows you to make a one-time investment.
Tata Capital’s Moneyfy is an online platform that allows you to make mutual fund investments from the convenience of your home or office. On top of that, you can compare the past performances of various mutual fund schemes and invest in the top mutual funds. You also have the liberty to monitor all your mutual fund investments in one place. Below are the steps you need to follow to make mutual fund investment online through Moneyfy:
Additionally, when you make your mutual fund investment, you have an option to choose between growth and dividend mutual funds. If you have invested in dividend mutual funds, you will receive your dividend payments upfront. Investing in such mutual funds allows you to ensure a steady flow of income.
On the other hand, if you have invested in growth mutual funds, the dividends from your mutual fund investments are reinvested to buy mutual fund units and provide higher capital gains over the years. Investing in such funds allows you to create a larger corpus.
Short-Term Capital Gains (STCG) from mutual fund investments are added to an investor’s annual income for a given financial year and taxed as per the applicable income tax slab rate. However, if an investor has paid the Securities and Transaction Tax (STT), STCG is taxed at a flat rate of 15%.
Long-term Capital Gains (LTCG) exceeding Rs. 1 lakh and arising from the sale of equity mutual funds are taxed at a flat rate of 10%. LTCG of up to Rs. 1 lakh are tax-free in the hands of investors. LTCG arising from the sale of debt mutual funds are taxed at the 20% rate with indexation benefits.
Mutual funds allow you to invest as per your risk appetite, investment horizon, and financial goals. For example, if you have a high risk appetite and can stay invested for the long term, you can invest in equity mutual funds. In contrast, if you wish to take a conservative route and invest for a short term, you can opt for debt mutual funds. Below are the types of mutual funds in India:
Mutual funds have emerged as one of the most popular investment vehicles in recent times. Investing in the top mutual funds can help you create a corpus for your long-term financial goals, such as your child’s education, retirement, etc. Below are the additional benefits of mutual fund investments:
1. Liquidity
Mutual funds offer liquidity which makes it easy for anyone looking to get cash quickly.
2. Diversification
Helps reduce risk by diversifying assets.
3. Managed by experts
A mutual fund manager thoroughly invests money based on their expertise.
Tata Capital’s Moneyfy platform allows you to make online mutual fund investments at your convenience. You can enjoy features such as:
Since mutual funds are market-linked investment instruments, they involve certain risks. Being aware of the risks associated with mutual fund investments can help you make an informed decision. Below are the risks of mutual funds that you should know:
When you invest in mutual funds, you can incur certain fees and expenses. They are charged by the AMC to cover the fund manager’s fee, administrative charges, and other expenses related to the management of mutual fund schemes. Being aware of these charges can help you get an accurate idea of the returns that you can generate from your mutual fund investments.
Below are the common fees and expenses associated with mutual funds in India:
Begin your mutual fund investments with Tata Capital Moneyfy. Whether it is advice from a fund manager or choosing the right mutual fund, we help you reach your investment goals.
Tata Capital’s Moneyfy platform allows you to invest in mutual funds conveniently from your home or office. You can create your investor account within a few minutes by uploading the required documents on the Moneyfy app or website and start investing in real-time.
You can consider factors such as your risk appetite, investment horizon, and financial goals while selecting the best-suited mutual funds.
Mutual funds have emerged as one of the most popular investment vehicles in recent times. They allow you to invest in money-market instruments with the guidance of a professional fund manager. Below are the steps you can follow for mutual fund investment online:
Step 1 - Identify your investment goals
The first step to mutual fund investment is identifying your investment goals. You need to define the purpose for which you are planning to invest in mutual funds. It can be short-term or long-term. For example, creating a corpus for your retirement, planning for your child’s education, buying a new car, etc.
Step 2 - Create your investor account
Next, you need to create an investor account with an online investment platform, such as Tata Capital’s Moneyfy. To create your investor account, you will need to complete the KYC requirements and upload the necessary documents.
Step 3 - Select the best-suited scheme
Then, you can select the best-suited mutual fund scheme as per your risk appetite, investment horizon, and financial goals.
Step 4 - Make your mutual fund investment
Now, you can make your mutual fund investment using any of the available online payment methods, including NetBanking, debit card, and UPI, among others.
There can be no concrete answer to this question as it depends on your personal choice. Both stocks and mutual funds have a few advantages as well as disadvantages. As mutual funds are managed by professional fund managers, they are less risky as compared to stocks. However, they do not have a history of providing multi-bagger returns. On the other hand, stocks are highly risky investment instruments but can also provide multi-bagger returns. So, if you prefer to gain high returns with lesser risks, mutual funds are the better option. But if you have the required market knowledge, you can opt for stocks.
There are several types of mutual funds in India. They allow you to invest as per your risk appetite and investment goals. You can choose from the following types of mutual funds as per your investment objectives:
Equity mutual funds
Mutual fund schemes that invest more than 65% of the corpus in equity instruments, such as stocks, are known as equity mutual funds. These schemes are best suited for investors who can take high risks and are investing for long-term financial goals, such as a child’s education, retirement, buying a house, etc.
Debt mutual funds
Mutual fund schemes that invest more than 65% of the corpus in debt instruments, such as bonds, are known as debt mutual funds. These schemes are best suited for investors who want to take a conservative approach and are investing for short-term and mid-term financial goals, such as planning for a vacation, buying a car, etc.
Hybrid mutual funds
Hybrid mutual fund schemes invest in a combination of equity and debt mutual funds in almost equal proportions. Such schemes offer the best of both worlds as they carry moderate risks and can also provide decent returns in the mid to long-term.
Mutual funds are managed by professional fund managers. They tend to provide excellent returns in the long term. However, as they are subjected to market risks, the returns can fluctuate in the short term. During such times, it’s crucial to stay invested and stay focused on your long-term financial goals.
Before investing in mutual funds, you must be aware of the transaction charges associated with them. These charges are levied to cover fund management expenses. Typically, a transaction fee of Rs. 100 to Rs. 150 is levied on lump sum mutual fund investments exceeding Rs. 10,000. It may vary depending on the asset management company and the mutual fund scheme.
Likewise, transaction fees are levied on SIP investments if the SIP amount exceeds Rs. 10,000. No transaction charges are levied on mutual fund investments if the investment amount is less than Rs. 10,000.
In the case of a regular mutual fund scheme, a front load commission of 0.1% to 2% of the investment amount is applicable. No commission is charged on direct mutual funds. Besides, the AMC may levy an exit load of up to 1% if you redeem your mutual fund investments within a year.