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Why Mutual Funds are the Best Bet for a Good Return on Your Investment

4 May 2018 No Comment

People who are fond of dealing with risks and getting higher returns together generally opt for investing in mutual funds. The mutual fund is one of the best investment options available in the Indian market and creates wealth in the future. In the mutual fund, the amount is invested in the equity, debt and/or money market securities. Mutual fund promises better returns than any other investment option. That is why the mutual fund is the best bet for a good return on your investment.

In mutual funds, the money is pooled by a lot of people i.e. investors. This amount of money is pooled with the Asset Management Company. The Asset Management Company invests this amount in debts, equity and/or securities. AMC earns the profit for investing money in various markets. AMC gives the profit after making some deductions to the investors as capital appreciation or dividends. The mutual funds let you invest the amount of the money in a diversified and professionally managed basket of securities. It is one of the best investment options for any person no matter what the age of the person is.

You can categorise the types of mutual funds as open-ended mutual funds and close-ended mutual funds. Open-ended mutual funds are those which can be withdrawn at any time before the maturity. While on the other hand, close-ended mutual funds are those which cannot be withdrawn before the maturity. Tax benefits are also available in the mutual funds. You must check the performance of various funds before investing your money. You can choose the funds as per your requirements and risk portfolio, and include all of the required funds into a single portfolio. It is important that you choose the funds wisely after doing a lot of research work.

What are the mutual fund options available in India?

Axis Long Term Equity Fund:

Axis Long Term Equity Fund is a growth plan. This plan involves low risk and higher returns. As per Sec 80C of Income Tax Act 1961, you get the tax benefits in this plan. The minimum investment required for this plan is Rs. 500. It is an equity-linked savings scheme fund which is managed by the AMC Axis Mutual Funds.  There is no entry and exit load in this plan. Axis Long Term Equity Fund was launched on December 21, 2009.

HDFC Mid-cap Opportunities Fund:

HDFC Mid-cap Opportunities Fund was launched on May 07, 2017. The minimum investment required in this fund is Rs. 5,000. It is an open-ended equity scheme. If you are looking for capital appreciation over the long period of time then you must invest in this product. The investments made in this plan are in equity and equity related instruments of small and mid-cap companies. The risk involved in this investment plan is moderately high. Chirag Setalvad and Rakesh Vyas manage the HDFC Mid-cap Opportunities Fund.

Aditya Birla Sun Life Frontline Equity Fund:

Aditya Birla Sun Life Frontline Equity Fund was launched on August 30, 2002. The minimum investment required for this fund is Rs. 1,000. If you are looking for long-term growth in equity then this Birla Sun life mutual fund is the best plan for you. Finance, Oil and Gas, IT and FMCG are some of the fastest growing industries in the Indian market in which the money of the investors is invested. It is an open-ended growth scheme. The exit load is 1% on or before one year while the exit load is nil after one year. As per the section 80 C of Income Tax Act, the money invested in equity is tax exempted.

What are the features of mutual funds?

Portfolio Diversification:

You spend some amount of money and you have a diversified investment portfolio. As a person alone it is tough for you to manage and purchase a lot of investments. Mutual funds make it easy for you. Mutual funds reduce the risk of the investors as fund house have experience and do a lot of research before investing the amount of the investors.

Transparent:

The mutual fund is a transparent investment option available in the Indian market. Investors keep receiving information related to the mutual fund investments they have made. They receive information about the nature of the investment done, strategy behind every investment and exact figure of each investment. That is why the mutual fund is a transparent investment one can make.

Regulations:

It is important to register all the mutual funds with the Stock Exchange Board of India. Stock Exchange Board of India has laid down some strict rules and regulations to safeguard the interest of various investors against the frauds that might happen. Even for the distributors, it is important that they register themselves with the Association Funds in India. And it is required for the distributors to follow the norms laid by the AFIC and SEBI.

Conclusion:

Mutual funds reduce the risk of the investors. Mutual funds are for short, medium and long period of time and involve high, moderate and low risk. You must do a lot of research work before initiating any investment as it ensures you that investment is worth making or not. You can take the help of the financial advisors while investing in mutual funds. The mutual fund is the best investment for a good return on your investment. Mutual funds are transparent and governed by the rules and regulations of the Stock Exchange Board of India to protect the interest of the investors. With the help of the mutual funds, you can have a diverse portfolio. If you are a person who likes to take the risks and also want to get higher returns then you must invest in mutual funds. Generally, the mutual funds are close-ended and open-ended; you can choose as per your need or requirement.

For checking out mutual fund options available in the market and features or characteristics of the mutual funds, do scroll up the page.

 

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