Mutual Fund Investments Online

What are mutual funds, and how do they work?

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.

How to invest in mutual funds through Moneyfy?

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:
 

Step 1 - Create your account on the Moneyfy platform by completing your KYC.

Step 2 - Submit the required documents, including PAN Card, Aadhaar Card, bank details, etc.

Step 3 - Select the mutual fund scheme in which you want to invest your money.

Step 4 - Choose whether you want to invest via SIP or lump sum and make the investment online.

How are returns earned in mutual funds?

When you invest in mutual funds, you start earning returns in two ways - capital appreciation and dividends. When the value of stocks or bonds in which a mutual fund scheme has invested rises, the Net Asset Value (NAV) of that fund also increases. This way, the investors get their returns through capital appreciation. However, you should always remember that mutual fund returns are subjected to market risks.

Are mutual funds taxable?

Yes, mutual funds are taxable in India. The profits from equity mutual funds are taxable as capital gains. The capital gains tax rate depends on the holding period of the mutual fund units.
 

• Short-Term Capital Gains

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

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.

Types of mutual funds:

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:
 

• Equity funds - They are stocks and offer high returns. Also considered high-risk, high-return assets.

• Bond/Debt Funds - They are debt classes such as government bonds, and fixed-income assets. Considered safe and provide regular returns.

• Money Market Funds -  They are liquid instruments such as T-Bills. Also, safe and provide immediate returns.

• Balanced/Hybrid Funds - A combination of all the asset classes such as debt and equity.

Benefits of mutual fund investments 

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.

Features of mutual funds with Moneyfy

Tata Capital’s Moneyfy platform allows you to make online mutual fund investments at your convenience. You can enjoy features such as:
 

• Quick registration

• Find over 30 + AMCs for your investments

• Access our expert fund managers

Risks of mutual funds 

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:
 

• Market Risk – Market trends are often uncertain.

 

• Concentration Risk - Focussing on only one asset class is risky as there’s no diversification. 

 

• Interest Rate Risk - Interest rates may change depending on the market

Fees and expenses

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:

• Entry load charges - applied for the very first time that you invest in a mutual fund 

 

• Exit load charges - applied to investors who exit a mutual fund scheme before the end date

 

• Standard transaction charges - applied depending on the amount invested 

 

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.