WHY SHOULD YOU INVEST IN A MUTUAL FUND?

MUTUAL FUND 

A mutual fund pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its portfolio.

WHAT IS A MUTUAL FUND?

A Mutual Fund is an investment vehicle, through which a large number of investors pool in their money to invest in a range of financial securities such as stocks, bonds, money market instruments, etc., in line with the investment objectives agreed upon, between the mutual fund and the investors.

Mutual Funds are run by Asset Management Companies. Investors' money is managed by a professional fund manager, who uses his knowledge and experience to invest your money in various financial instruments and securities.

• Mutual Funds help investors build their wealth by enabling them participate in various opportunities available in the market.

• The money raised from the investors goes to the government, corporates, banks and other entities, which helps them invest in projects and fund expenses.

WHY SHOULD YOU INVEST IN A MUTUAL FUND?

Diversification: 

A mutual fund spreads your money across a diverse number of securities. It ensures that all your eggs are not in one basket, thus reducing the risk in investment, which for an individual investor is tough to practice.

Wide Choice: 

In India a wide variety of mutual fund schemes are offered by 43 mutual funds AMCs. So, there is a scheme available for every kind of risk and return appetite and every time horizon.

Safe & Convenient: 

It is possible for investors to structure their investments according to their liquidity and taxation requirements. Further, an investor can withdraw his investment fully or partially. anytime from the mutual fund. Mutual fund transactions are safe as all transactions are carried out via your bank account only.

Well Regulated: 

Mutual Funds are regulated by SEBI. The latter has mandated strict checks and is constantly refining rules and regulations to keep a check on mutual funds' activities and hence ensures investors' protection.

Tax Savings: 

Investment in ELSS Mutual Fund Schemes is eligible for deduction of up to R1.50 Lacs p.a. under Section 80C of the Income tax Act. Further, ELSS scheme has the minimum lock in period of 3 years amongst all tax saving instruments.

Online Transactions: 

Now all mutual fund transactions can be executed completely online through a Demat account. Now an MF transaction can be done from your smartphone and no paperwork is involved.

Systematic: 

Option to invest systematically through SIP & STP and withdraw regularly through SWP

Tax Benefits: 

Long term capital gain in MF is nil. If you invest in an equity MF scheme for 1 year or more, you don't have to pay any taxes on returns made by you.

UNITS

The total money that is collected from the investors by a mutual fund is the capital of the scheme and this capital is broken down into units. The investor is issued units of the scheme. Just like shares represent the extent of equity ownership in a company. units represent your extent of ownership in a mutual fund.

NAV

Net Asset Value (NAV) is the value per unit of the mutual fund scheme. It is the main performance indicator of a scheme. If the scheme is profitable, the NAV increases and if the scheme is in loss, the NAV goes down.

NAV represents the market value of the securities in the scheme's portfolio. Mutual Fund units are bought and sold on the basis of NAV of the scheme. NAV is updated and published daily, in at least two newspapers having nationwide circulation. You can view your scheme's latest NAV anytime from AMFI website and various other websites.

Disclaimer: The figures/projections are for illustrative purposes only. The situations/results may or may not materialize in future. Mutual Fund investments are subject to market risk, Read all scheme related documents carefully. Past performance may or may not be repeated in future.