Advantages of Investing in Mutual Funds
Investing in mutual funds offers numerous benefits that make them an attractive option for both new and experienced investors.
1. Professional Management
Mutual funds are managed by experienced professionals who monitor markets and manage portfolios actively, ensuring optimal returns.
2. Diversification
By investing in a variety of assets, mutual funds reduce the risk associated with individual securities — spreading out the risk is key to stable growth.
3. Affordable & Accessible
You can start investing with as little as ₹500 through SIPs (Systematic Investment Plans), making mutual funds accessible to all income groups.
4. Liquidity
Most mutual funds (especially open-ended ones) allow investors to redeem units at any time at the prevailing Net Asset Value (NAV).
5. Transparency
Mutual funds publish regular updates about their performance, holdings, and expenses, allowing investors to stay informed.
6. Tax Benefits
Certain types of mutual funds like Equity Linked Savings Schemes (ELSS) offer tax deductions under Section 80C of the Income Tax Act.
7. Flexibility with SIPs & SWPs
With Systematic Investment Plans (SIPs), you can invest regularly. With Systematic Withdrawal Plans (SWPs), you can receive regular income from your investments.
Types of Mutual Funds
Mutual funds are categorized based on their structure, asset class, and investment objective. Below are the main types of mutual funds available in India:
1. Equity Funds
These funds primarily invest in stocks and are suited for long-term wealth creation. They carry higher risk but also offer high return potential.
2. Debt Funds
These invest in fixed-income instruments like government bonds, corporate bonds, and treasury bills. Ideal for conservative investors.
3. Hybrid or Balanced Funds
These combine equity and debt to provide balanced returns with moderate risk. Suitable for investors seeking growth with stability.
4. Index Funds
These replicate a stock market index like Nifty or Sensex and aim to mirror its performance.
5. Sector Funds
Focused on specific sectors like banking, pharmaceuticals, or IT. These are more volatile and best suited for experienced investors.
6. ELSS (Equity Linked Savings Scheme)
Tax-saving mutual funds offering tax deduction up to ₹1.5 lakh under Section 80C with a lock-in period of 3 years.
7. Fund of Funds (FoF)
These invest in other mutual fund schemes instead of directly in stocks or bonds. Offers exposure to international funds as well.
|
Type
|
Objective
|
Risk Level
|
|---|---|---|
|
Growth Funds
|
Capital appreciation over the long term
|
High
|
|
Income Funds
|
Regular income through dividends/interest
|
Low to Medium
|
|
Liquid Funds
|
Short-term parking of surplus funds
|
Very Low
|
|
Tax-Saving Funds (ELSS)
|
Tax benefits with capital growth
|
Medium to High
|
|
Capital Protection Funds
|
Protect capital while offering modest returns
|
Low
|
Whether you’re just starting or looking to optimize your portfolio, our team at Deccan Investment Centre helps you navigate the world of mutual funds with clarity and confidence.
We assist in
- Understanding your financial goals
- Assessing your risk profile
- Recommending suitable mutual fund schemes
- Providing timely post-investment support
For more information, Fix an appointment