Mutual Funds

All About Mutual Funds Returns In India

What are Mutual Funds?

Mutual Funds are financial vehicles that hold 'shares' of various successful organisations that contribute to the Nation’s economy. The shares of such organisations are listed by the stock exchange, like NSE or BSE. When you invest in Mutual Funds you get to buy shares of such successful companies. As these companies earn profit a part of their earning goes to you and increases the amount of your investment.

Mutual funds are run by AMCs or Asset Management Company that pools in money from different investors and invests the same in bonds, equity, securities and several money market instruments. Each of the investors is assigned with a specific number of units in accordance with the invested amount and shares the gain or loss in that specific unit in proportion to the investment made.

With MFs you earn money in three possible ways –

The share price of the fund increases
The price of the securities increase
Income earned from the dividend and interest from stocks and bonds respectively

Types of Mutual Funds

The most common types of Mutual Funds in India are –

Equity Funds

What are Equity funds?
Equity funds generally invest in various company shares to generate handsome returns on investment. The shares are spread across various sectors with variable market capitalizations. However, equity funds possess an amount of risk as it depends on market fluctuations.

What are the benefits of Equity funds?
The benefits of investing in Equity funds are –

Cost-effective
Offers flexibility
Offers liquidity
Offers diversification
Convenient
Systematic investments
Managed by fund experts

Who should invest in Equity funds?
Equity funds are best for those with high-risk appetite and market knowledge. The investor should have the patience and time to monitor the fluctuating market and make investments after studying the market well.

Debt Funds

What are Debt funds?
Similar to corporate bonds, commercial papers, government securities and such other money market instruments, debt funds also offer fixed income against the investment. These funds have a pre-decided maturity date and a fixed interest rate that the investor gets to earn on maturity. The returns are immune to the market fluctuations and hence are considered low-risk investment options.

What are the benefits of Debt funds?
The benefits of investing in Debt funds are –

A lesser amount of risk
A specific duration of investments
High credit profile quality
Increased returns
Tax benefits
Offers flexibility
No loss of day’s growth

Who should invest in Debt funds?
Debt funds are suited for investors having a lower risk appetite. Although the returns are not guaranteed, it is in an expected range.

Money Market Funds

What are Money market funds?
Money market funds invest in cash, short-term debt investments and cash equivalent money market instruments. Money market funds are considered safe and low-risk investments. As these types of funds are high-quality instruments, they certainly offer a risk-free return.

What are the benefits of Money market funds?
The benefits of investing in Money market funds are –

Lower or moderate risk
Easy access to money market
Secured returns
Short-term investments

Who should invest in Money market funds?
Money market funds offer the maximum short-term income by sustaining a well-diversified portfolio of several money market instruments. These funds are suitable for investors with shorter investment horizons. Investors with a surplus investment amount and a low-risk tolerance can invest in Money market funds.

Index Funds

What are Index funds?
Index funds are investments made in stocks that actually imitates stock market index such as BSE Sensex, NSE Nifty and similar others. Such investments are made without changing the portfolio consumption, meaning, the fund manager supposedly invests in the same securities available in the underlying index. Besides, the investments are made in the same proportions and offer returns that are in tandem with the index they track.

What are the benefits of Index funds?
The benefits of investing in Index funds are –

Tax benefits
Passive fund management
Low risk
Low expense
Broader diversification

Who should invest in Index funds?
Index funds are best suitable for investors who favour predictable returns and desire to invest in equity markets. These funds are passively managed and hence holds a low amount of risk.

Balanced Funds

What are Balanced funds?
Such financial vehicles are an amalgamation of debt and equity funds. Such funds are also termed as hybrid funds and allow the investors to have a diversified portfolio. As they maintain a balance between the investments, these funds also balance the amount of risk and offer maximum returns.

What are the benefits of Balanced funds?
The benefits of investing in Balanced funds are –

Tax benefits
Reduced risk
Diversified portfolio
Shield from inflation
Re-balancing of funds

Who should invest in Balanced funds?
Balanced funds are best for the investors seeking safer investment options and own medium investment capital. Investors with a low-risk appetite can consider balanced funds to generate higher returns on investments.

Income Funds

What are Income funds?
Income funds are a type of debts funds that has a Macaulay Duration of 4 years or more (as explained by Securities and Exchange Board of India (SEBI)). These funds generally make use of debt instruments such as government securities, debentures, corporate bonds and more.

What are the benefits of Income funds?
The benefits of investing in Income funds are –

Easy liquidity
Tax benefits
A lucrative alternative to fixed deposits

Who should invest in Income funds?
Income funds are best for the ones who want to have a stable and regular income from the investments. Such funds are best for investors planning their retirement. It owns a lower risk and hence can be preferred by investors with low-risk tolerance.

Fund of Funds

What are Fund of funds?
Fund of funds or FoF are investments that make use of its pool of resources to initiate investments in different kinds of mutual funds investment plans in the market. It holds a portfolio of varying degree of risk depending on the aim of the investor and the fund manager.

What are the benefits of Fund of funds?
The benefits of investing in Funds of funds are –

Expert fund managers
Diversified portfolio
Low resource requirement
Tax benefits

Who should invest in Fund of funds?
The primary goal of investing in Funds of funds is to generate the maximum returns by investing in a varied portfolio to minimise the risk. Investors with limited resources and low liquidity can invest in Funds of funds to generate maximum returns at minimal risk.

Speciality Funds

What are Speciality funds?
Speciality funds are a type of mutual fund that deals with securities of specific industries, regions or sectors. The performance of such funds depends on the performance of the industry. However, these investments have no diversification and hence possess a higher amount of risk.

What are the benefits of Speciality funds?
The benefits of investing in Speciality funds are –

Easy access to real estate, telecommunications, chemicals, banking and more
Exposure to particular areas of the market
Potential of higher return
Includes asset allocation and target-date funds

Who should invest in Speciality funds?
Speciality funds possess higher risk and hence investors should have a higher risk appetite. It is best suited for investors having surplus capital, market knowledge and the required patience.

Invest In Debt Fund

Benefits of Mutual Funds

The upsides of MFs are endless, to name a few –

Two lucrative investment options – SIP or Lumpsum
Higher returns
Lower risk
Automated investments
Minimum investment amount
Flexibility
Availability of loans against MF
Liquidity
Tax benefits and more

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Who should invest in Mutual Funds?

Age – There is no such age bar and you are never too old nor too young to invest in a Mutual Fund to secure your future. You can start as soon as you earn your living and as late as 45 years of age. The best time to start your Mutual Fund investment is NOW. But be careful to choose from the mutual funds investment plans.

Profession – The domain of your profession does not matter unless the work you do is illegal. Besides, Mutual Funds offer a minimum investment amount, making MFs a lucrative option for the ones starting their corporate career. Depending on your income and cash flow you can choose to invest in SIP or make a lumpsum investment.

Citizenship – Indians, PIOs and NRIs can invest in Mutual Funds in India. Considering that Mutual Funds in India do not accept investments in foreign currencies, PIOs and NRIs will have to invest through their NRE or NRO accounts. The tax benefits for such investments may differ.

Invest In Liquid Fund

How to start investing?

Now that you are ready to secure a financially stable future, let us take you through the investment process or the application process. You are required to first open an account and share the necessary details. Once the details are verified, the portal will inform if you are compliant with the KYC norms. Once proceeded, you are required to link your bank account by sharing the details via a cancelled cheque. For investments initiated through a fund house’s website, a cancelled cheque may not be required.

For those who swear by the offline method, you will have to fill-up two MF forms – the common application form and the SIP form. The common application form will require you to share basic information such as name, date of birth, contact details, residential details, bank account details, and more. To invest with a fund house for the first time, you will have to submit the common application form to open your account and then submit the SIP form if you wish to start with a SIP.

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Why choose us?

With a strong financial management skill and a customer-centric business infrastructure, Money Assist has a repute of its own for offering quality service to its customers with the best Mutual Funds returns. We house over 19 financial warriors battling to support your financial goals and growth.

We aim to offer active protection to your financial stability. We help you add direction to your investment with proper analysis of your financial portfolio and financial goal. We acknowledge the need for financial stability in India and hence have a concrete liaison with some of India’s best Fund houses that supports lucrative wealth creation for a financially competent future.

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Mutual Funds

All About Mutual Funds Returns In India