In mutual fund investment, a pool of investment from different investors are collected together, and a diversified portfolio is created in order to invest in the finance of investors. Mutual funds in India are getting a more popular source of investment for investors as it carries many benefits with it. Compared to traditional investment options, mutual funds provide more returns. Mutual funds enable even the smallest of investors to create a very diversified portfolio with an investment of as low as ₹ 500 in the mutual funds. Your mutual funds are managed by companies called AMC or an Asset Management Company.

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What would make you an investor, gain confidence in mutual funds? For starters, ROI or return on investment on a mutual fund is highest among all the assets. Another reason to invest in mutual funds is that your portfolio or the fund is managed by a fund manager who is well experienced and qualified in the investment industry, which assures that your money is invested in the most appropriate asset class. Along with that, mutual funds are regulated by  The Securities and Exchange Board of India (SEBI) is the regulator of the securities and commodity market in India owned by the Government of India, along with AMFI (Association of Mutual Funds in India). This ensures the security and interest of investors, making mutual funds a lucrative investment opportunity. 

 

The fund manager invests in various securities in order to maximize the profit of the investors. The funds have entry and exit load, a fee applicable on entering and exiting the fund. As per SEBI rules, the level of risk in a mutual fund is denoted through colors.

Blue: Your principal is at low risk.

Yellow: Your principal is at medium risk.

Brown: Your principal is at high risk.

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You should consider not only the fund’s risk but also the fund manager who will take the fund in his hand and work for the growth of your investment as his judgments and experience along with the in-depth knowledge of the market decide the fate of your precious money. We at LiquidTalk grind consistently to create the optimum diversified portfolio for our clients to earn a return on the investment that you deserve. 

 

Types of Mutual Fund in India

 

The Securities and Exchange Board of India (SEBI) has classified mutual funds predominantly into three categories: 

 

Equity Funds: A pool is considered equity fund when the investment of the assets is 65% or more in equity and equity-related instruments. The rest of the 0-35% is invested in debt or money market.  They are also called as Stock Mutual Funds. There are 11 types of equity funds with the most popular being ELSS – Equity Linked Savings Scheme as ELSS is the only equity fund that qualifies under section 80C of the Income Tax Act for a tax benefit of up to ₹ 1.5 lakh. Equity mutual fund carries more risk quotient with itself; as a result, carries higher returns. 

 

Debt Funds: Low-risk investors are suggested to invest in debt mutual funds as debt funds provide more stable returns compared to other funds. The majority of investment is done in debt instruments and money market. According to SEBI, the debt fund is divided into 16 types. 

 

Hybrid Funds: In a hybrid mutual fund, the funds are appropriately divided into the two debt and equity funds, respectively. Due to hybrid fund risk and return on investment are done aptly. Risk bearing capacity and gains are apportioned pertinently. 

 

Advantages of investing in Mutual Funds

- Flexible investment amounts starting from just ₹ 500.

- High returns on the invested amount.

- The portfolio is highly diversified, ensuring the balance between risk and return. 

- Tax benefit on LTCG up to  ₹1 Lakh and ₹1.5 Lakhs if invested in ELSS.

- In the case of RGESS, one gets tax exemption as well

- An expert professional manages the portfolio with a nominal fee called Expense ratio ranging between 0.5% to 1.5%, not exceeding 2.5% limit set by SEBI. 

- Safe and transparent as governed and intervened by SEBI.

- If opted for an open-ended mutual fund, the investment is highly liquid. 

 

Mutual funds give the perfect risk-return balance amongst different types of investment options available in the market, ensuring the investors have significant benefits. So invest your money with LiquidTalk today.