Mutual fund Investment is extremely useful for achieving various financial goals in your life. Investing in a mutual fund is beneficial for children’s education, home buying, retirement planning.
When investing, security, returns and availability of money as needed are very important. Every investment carries a risk and it is advisable to know this risk and take appropriate measures to reduce it, so that you can achieve your financial goal by getting a good return.
A study of investor mentality reveals that the expectation of many middle class people is to get maximum return without taking any risk or any kind of risk. Due to the same mentality of the investors and lack of proper knowledge about the risks involved in fixed deposit companies, companies invest in fixed deposits or other schemes with the expectation of getting somewhat higher returns. If for some reason such a transaction is damaged, it has a huge impact on later life. This is why investors should invest in such investment options only if they are financially literate and ready to take the risks.
Small Introduction of Mutual Fund
Mutual funds are investments made by a group of investors with similar financial objectives. This point will become clearer with the help of examples. Example Investors in a mutual fund’s diversified equity fund.
Investors who want to build wealth by investing in stocks in various sectors for a long period of time (more than 15 years) and are willing to take risks, invest in diversified funds of mutual funds. Mutual fund companies hire expert fund managers to invest in stocks in various sectors with their help and pass on the benefits to investors in proportion to their investments.
Mutual Fund Investment
Mutual fund investing is one of the best investment options. Mutual fund investments are risky and every advertisement highlights that ‘Mutual fund investment is a subject to market risk please read offer document carefully’ i.e. risk is involved in mutual fund investments. And you should invest by reading the offer document.
Economic literacy is very low in India. Mutual funds should not be invested in just looking at the returns. In order to make investors aware of the potential risks, SEBI has made it mandatory for mutual fund companies to provide risk information for the benefit of investors.
Even when you think about advertising, you can also see the advertisement ‘Mutual Fund Sahi Hai’. In this article we will learn how to make money with the help of mutual funds.
Types of Mutual Funds
There are different types of mutual funds. SEBI has provided 36 variants for the benefit of investors. This classification is useful for the person who wants to take the maximum risk as well as the person who wants to take the minimum risk. Investors are expected to invest in mutual funds wisely, knowing the risks involved with the help of a riskometer.
Here are some key types of mutual funds and how they can be used for fund raising.
Tax Saving Plan
By investing in a mutual fund’s tax savings plan, you can reap the double benefits of tax savings and wealth creation. Investors recommend investing in mutual fund tax savings plans for a longer period of time (more than 15 years) to get the dual benefits of tax savings and wealth creation.
Below are the List Top Tax saving ELSS Fund Performance
| Plan Name | 1Y Return | 2Y Return | 3Y Return | 5Y Return |
|---|---|---|---|---|
| Quant Tax Plan | 126% | 45% | 31% | 25% |
| Mirae Asset Tax Saver Fund | 74% | 26% | 21% | 23% |
| BOI AXA Tax Advantage Fund | 72% | 31% | 18% | 20% |
| Canara Robeco Equity Tax Saver | 66% | 25% | 21% | 19% |
| Quantum Tax Saving Fund | 65% | 15% | 12% | 12% |
| Union Long Term Equity Fund | 59% | 21% | 15% | 14% |
| DSP Tax Saver Fund | 68% | 23% | 18% | 18% |
| UTI Long Term Equity Fund (Tax Saving) | 60% | 22% | 15% | 15% |
| Kotak Tax Saver Scheme | 62% | 20% | 18% | 17% |
Child Fund
Mutual child funds can be selected to cover the expenses of higher education of children, marriage, capital for business etc. Let us learn the tricks of child fund with the help of an
For Example
Ganesh and Vedika’s son Arjun is 3 years old today. Ganesh and Vedika want to provide at least Rs.20 lakh for Arjun’s higher education today. Considering inflation, they will need Rs.64,00,000 (64 lakh) for this purpose in future. Ganesh and Vedika can achieve their target in the next 15 years by investing Rs.11,500 per month in a mutual fund.
- Arjun is 3 years old today
- Expenditure for higher education abroad today – Rs. 20 lakhs
- Expenditure for higher education abroad after 15 years (Arjun’s 18th year) – 64 lakhs
- Expected Return on Mutual Fund Child Fund Investment 12%
- 11,250 per month investment in mutual fund child funds
Balanced Fund
In a balanced fund, at least 65% of the amount is invested in shares and the rest is invested in government securities and other securities that offer safe returns. You can get relatively low risk and high profit in a balanced fund of mutual funds.
Retirement Fund
You can raise a good retirement fund by investing in a mutual fund retirement fund. A very large fund is required for approximately 30 years of life after retirement. Investing in a mutual fund is beneficial as it is not possible to raise such a large amount of funds from traditional savings and investment options.
The mutual fund’s retirement fund scheme invests in shares and government securities. There are various retirement plans available form mutual fund companies.
- Only 40% in shares and the remaining amount in the secured option.
- 100% in shares such various options are available to the investors.
Top Retirement Fund List
| Plan Name | 1Y Return | 2Y Return | 3Y Return | 5Y Return |
|---|---|---|---|---|
| Nippon India Retirement Fund – Direct Plan | 56% | 8% | 6% | 11% |
| HDFC Retirement Savings Fund – Direct Plan | 73% | 24% | 17% | 18% |
| Tata Retirement Savings Fund – Direct Plan | 46% | 18% | 12% | 17% |
| Tata Retirement Savings Fund – Direct Plan | 40% | 17% | 11% | 15% |
| Aditya Birla Sun Life Retirement Fund – Direct Plan | 41% | 14% | – | – |
| Axis Retirement Savings Fund – Direct Plan | 38% | – | – | – |
| HDFC Retirement Savings Fund – Direct Plan | 52% | 18% | 15% | 17% |
| Aditya Birla Sun Life Retirement Fund- Direct Plan | 33% | 14% | – | – |
Depending on the age at which the investment is started, financial viability, expectation of return on investment, risk-taking ability, the right option should be chosen with expert advice.
Conclusion
Mutual Fund Investment is extremely beneficial for wealth growth. By making a long term investment in a mutual fund, you can properly fulfill your various financial objectives and for this you should consult an experienced mutual fund seller, SEBI Registered Investment Advisor.
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