They also focus on the preservation of moderate income as well as the capital. These mutual fund schemes invest in the companies constituting the index in the same proportion as the weightage of that company in the index. The best part about this mutual fund investment scheme is the investors get an opportunity of investing their money i.e. The expense ratio can vary from 0.5% to 1.5%. Your email address will not be published. Unlike equity based schemes that aim for capital appreciation, debt funds aim to provide regular income. These are then declared regularly.

As mutual funds differ in types, it gets quite challenging for investors to pick the right type of investment funds and kickstart their investment careers.

Generally, one only invests about 40 to 60 percent in debt or equity. What are the different types of mutual fund schemes? MIPs are best suited for  investors who want to earn regular returns at a better rate of return than pure debt funds.

The latter allows people to enter and leave the funds’ investment whenever they want. As you invest in equity funds, you get a higher ROI. Any mutual fund where less than 65% of the total money is invested in the equity market is debt fund. The details of these schemes are covered under the article Categorization and Rationalisation of MF Schemes- SEBI Directive. The NAVs of debt funds witness lesser volatility. The best part is even if you choose the other types of investment options (which don’t specifically focus on tax saving benefit); you won’t be charged tax for amount up to 1 lakh.

They can then sell or buy the scheme’s units on stock exchanges with the lists given alongside the units.

B-98-99, Third Floor, Lajpat Nagar-I, New Delhi 110024. Various types of mutual fund c…

In fact, all your investments are managed by professionals who possess years of experience in dealing with investment instruments. The frequency and value may vary from scheme to scheme. But to speak simply, the loyal investors should not bother with these fluctuations. No need to issue cheques by investors while subscribing to IPO. Sectoral funds: These schemes too invest in the stock market.

Another famous type of Mutual fund is debt funds, where a major portion of the money is invested in money market securities and debt. Liquid funds happen to be income funds but their aim is basically offering easy liquidity. On that note, let’s move to the other section of the post which is “benefits of investing in mutual funds”. An investor can opt to receive regular dividends (Dividend option) or choose to take advantage of the growth of asset ( Growth option).
The demand for mutual fund investments is increasingly popular in this digitalized world. But most prominent among them can be grouped under eight mutual fund schemes. If you want your money to grow rapidly, then equity funds are the best pick! This type of fund has some risks as well. You can expect up to 7% of ROI in investments. Index Funds (or Passive Funds):  The schemes under index funds also invest in the stock market but only in those stocks that are part of a particular index like the SENSEX, Nifty, or other index mentioned as part of investment objective. The investment goals that you have in your mind are dependent on the choice of mutual fund schemes. 2) The fund house or AMC compares the latest investment opportunities with the ones already existing. With a wide range of mutual fund schemes available at present, it becomes difficult to pick the most appropriate mutual fund scheme for you. No matter which mutual fund investment scheme you opt for, you can rest assured that your money is safe with financial experts. In the same way, investors also invest in the money market, also known as capital market or cash market.

Another thing of concern is the goal that you have in your mind. Are you looking to have better investment options to get high returns? Index Funds are like portfolios of indexes like S&P 50 index (Nifty), BSE Sensitive index, and more. Yes, you read it right! This type of Mutual fund schemes is known as gift fund which invests in government securities. Today, mutual funds are considered the most reliable and flexible investment solution for investors across India.

FMPs offer steady returns for fixed tenure and  this makes them similar to a Bank Fixed Deposit. The fund remains open for investors to subscribe during a particular period of time, specifically during the scheme’s launch.

Balanced Funds:  These funds aim to balance between growth and income by investing in the stock market as well as in debt instruments. The investments in ELSS can save you up to 1.5 lakh on tax. The close-ended fund includes some stipulated maturity period. Since debt is less volatile than equity, FMPs normally meet the interest projections. The rate of returns can go up to 15% if you invest in equity funds for over 5 years. Hence, the tax is deducted at source and is paid by the mutual fund. It is no longer an era when people would invest in traditional investment instruments.

It carries a lock in period and offers tax benefit under section 80 C. Please go through the article Equity Linked Savings Scheme (ELSS) to have a thorough understanding of the scheme. In growth options, the NAV increases and benefit can be encashed by selling the  units at a higher NAV. Most of other mutual funds can be bought at any time. For example, you can fix monthly, quarterly, or weekly mutual funds investment option where a specific amount set by you will be deducted from your bank account automatically. Types of Mutual Funds Basically, there are three types of mutual funds categories in India – debt funds, equity funds, and hybrid funds. 1) The mutual fund investment process starts when AMC discovers the right money-making opportunity that is subject to certain risks in the market. There is no fixed ratio that you are obligated to follow. Another major advantage of mutual funds is that it is handled by professional fund managers, who possess years of experience in managing financial profiles of the investors.

The funds can be appropriate for the individual investors or even the corporate investors. They can consider it as the mode to park surplus funds within a short period of time. ), you need not undergo the same process again when you approach another intermediary. MIP’s invest around 80% to 90% of their total funds in debt securities comprising of bonds, debentures, government securities to ensure safe, regular returns. One who invests in this fund can sell and buy the units conveniently at a related price (which should be NAV-based). Furthermore, these funds come in a wide range of schemes and types.
You are only liable to pay tax on the earnings that exceed 1 lakh.

There are many types of MF schemes. If you are not willing to take higher risks, then debt funds should be your number 1 priority. LTD. Index funds are also known as passive funds as changes (buying and selling of shares) happen only when some company is dropped from the index and replaced with another company. Sectoral fund are high risk investment option because of the dependence on the performance of chosen sector. Say, you can have five to seven years, for example. Under section 80c of the Income Tax Act, the investors who put their money in ELSS can save up to 1.5 lakh on tax.

Yet, according to a report by Boston Analytics, less than 10% of our households do not consider mutual funds as an investment avenue. The funds don’t get affected due to fluctuations in the equity market. These schemes do not have a fixed maturity … But before we get started, let’s have a quick look at the meaning of mutual funds investment.