Mutual Funds
Mutual Funds
A mutual fund is an investment that pools money from a large number of different investors. This money is used to purchase a variety of securities including stocks, bonds and other money market instruments. When you buy a unit of a mutual fund, you own a small stake in all the investments that are included in the fund.
01
Easy method of diversification
In order to diversify, an investor has to buy various securities from different asset classes. This can be a time-consuming and costly affair. Investment in a mutual fund provides diversification at least cost expended because the mutual fund invests in a variety of different securities, for instance, the S&P 500 fund. This mutual fund invests in as many as 500 securities that belong to various classes of assets and sectors. This includes stocks from IT, pharma, mining, banking, motor and many other sectors. Mutual funds are a diversification strategy used by investors to take various benefits.
02
Professional management
Mutual funds are managed by professional fund managers and the main objective of the managers is to maximize the fund’s performance Mutual funds is a good investment by investors because the investors are saved from research and analysis of the market which is handled by fund managers.
03
Invest Less
Mutual Fund is a cost-effective way of participating in the investment journey. Regular investments of as little as Rs 500 each month through systematic investment plans (SIPs) can help you build a corpus over time. On the other hand, investing in securities individually is a huge amount of investment.
Different types of mutual funds for different goals
Equity funds
Equity mutual funds are those where the majority of the money is invested in stocks. The fundamental objective of equity funds is capital appreciation; these funds have the potential to help you earn higher returns. This is because an equity fund is directly linked to the stock market. However, the flipside is that they tend to be slightly risky, at least over the short-term.
Debt funds
Debt funds or fixed income funds invest most of the money in assets such as government securities and corporate bonds. These funds offer regular returns to the investor. Debt funds are considered relatively less risky. These funds are ideal for investors who desire a steady income and are averse to risks.
Balanced funds
As the name suggests, balanced funds try to achieve a balance between risk and return. They invest in a mix of both fixed income securities as well as equities. This way, investors in the fund can get the benefit of high returns at a minimal level of risk. In addition, these funds also offer a good level of diversification to the investor.
Sectoral funds
Sectoral funds invest in businesses that belong to a specific sector or industry. For instance, a mutual fund that invests solely in the pharmaceutical sector is a sectoral fund. These funds are considered risky due to their focused exposure to a particular sector in the industry. However, they are capable of offering higher returns to investors. These funds are suitable for investors with a high-risk appetite and considerable experience in the market
Tax-saving funds
Tax-saving mutual funds are ideal for availing tax rebates under the Income Tax rules of the country. Under Section 80C of the IT act, you can get a deduction of Rs. 1.5 lakh each year by investing in these funds. It is important to note that not all mutual funds are eligible for tax benefits. Equity Linked Saving Scheme (ELSS) funds are a prime example of tax-saving funds.
Index funds
The BSE Sensex consists of 30 stocks and the NSE Nifty has 50 stocks. What if an investor wanted to benefit from investing in all these stocks but doesn’t have the required money to do so? Index funds are a perfect solution. An index fund is constructed in such a way that it matches the components of a stock market index such as Sensex or Nifty. This way, the value of the fund moves just as the index moves. Investing in an index fund is a great way to achieve diversification at a very low cost.
How do I invest in Mutual Funds through Takht Financial?
Mutual fund investment and trading services are done by us. Investment Strategies and Investment Plans are provided by us for investors to reap maximum benefits.
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