Mutual funds are created when several people who wish to earn wealth (investors) combine
their resources to create a huge investable amount (corpus). This large corpus is then
invested into various companies across industries, operating in different sectors of the
economy - depending on the type of fund chosen. All the investors of a mutual fund share in its
profits, losses, incomes, and expenses in direct proportion to their level of investment.
Companies that create mutual fund schemes are called Fund Houses or Asset Management
Companies (AMCs). The professionals who study the markets and pick companies to invest
in are called Fund Managers. Fund managers spend a great deal of time analysing markets
and studying different sectors of the economy to figure out which companies are most likely to
turn a profit - in different time frames - and choose the best option.
There are thousands of mutual funds in India, under different categories, offered by hundreds
of AMCs and Fund Houses. For fairness and transparency, global agencies exist that analyse and
rate the performance of funds over time and make sure that investors are well informed before
investing. It is mandatory for AMCs to declare a standard against which the performance of any
given fund can be measured - this is called a benchmark. There are also regulatory
bodies like AMFI and SEBI that ensure no investor ever gets scammed.
Mutual funds allow individuals to make their money work for them - meaning that they do not
need to actively perform tasks for monetary gain. Any amount invested in mutual funds will
either grow or shrink depending on market performance and the skill of the fund manager.
There are many different types of mutual funds available today, and can be categorised
based on investment objective, structure and asset class. Apart from this, there are
specialised mutual funds.
1. Types of mutual funds based on asset class:
a. Equity Funds: The
primary focus of equity funds is to invest at least 65% of the total corpus
into equity (stocks) and equity related instruments of
different companies. Stock market fluctuations affect the performance of these
holdings and determine whether they make a profit or not - as such, equity
funds are slightly riskier than other types of funds.
Diversification of the corpus between companies operating in different sectors
of the economy and hands-on expert management serve to mitigate most of the
Equity funds are further sub-categorised based on the investment strategy
(Value, dividend yield, focussed), whether the fund is managed actively or
passively (Active/Index), the level of market capitalisation (small-cap, mid-cap, large-cap), or whether it’s a Sector
or a Thematic Fund (that only invests in a particular sector like
pharmaceuticals or petroleum or a theme such as services, healthcare, etc.).
Equity funds are recommended to those willing to wait at least 5 years to see
substantial returns, and who don’t mind the inherent risk involved with equity
investments. These funds operate at a higher risk, with the possibility of a
b. Debt Funds: The
primary focus of debt mutual funds is to invest a majority of its corpus into
fixed-income investments, such as treasury bills, money market
instruments, corporate bonds and debentures, commercial papers, gilt,,
government securities, and other debt securities.
Debt funds are further sub-categorised based on how long their holdings will
take to reach maturity (for example short-term debt funds,
ultra-short-term debt funds, liquid funds, dynamic bond funds),
instruments where they can invest (corporate bond funds, gilt funds, credit
risk funds, banking and PSU funds, money market funds)
Debt funds are recommended for those who don’t want to risk their capital for a
chance to earn returns higher than bank deposits, but who’d rather invest their
capital in order to earn a smaller, relatively stable returns with greater
c. Hybrid Funds The
primary focus of hybrid funds is to invest in a portfolio as balanced as it is
diverse, by channeling investments proportionally into equity and
debt instruments. This is done in order to create long-term
capital appreciation at lower risk/ with lower volatility.
Hybrid funds can be of two major types - aggressive hybrid funds and
conservative hybrid funds. An aggressive hybrid fund is an
equity-oriented mutual fund will have 65%-80% of its corpus invested in
stocks, shares, etc. and the remaining invested in debt instruments or money
market instruments. A conservative hybrid fund is a debt-oriented
mutual fund which will have 75%-90% of its corpus invested in debt
instruments and the remainder in stocks, shares and other equity instruments.
Hybrid funds also allow for a degree of liquidity, and divert part of the
corpus into cash and cash-equivalent investments.
Hybrid funds bridge the gap between long-term capital appreciation and
short-term income requirements of investors. As such, they are popular among
new investors and experienced conservative investors alike.
2. Types of mutual funds based on investment objectives:
a. Growth Funds: These
funds invest primarily in equities. Diversified investments in stocks and
shares of various companies usually make up a good Growth Mutual Fund. The
primary goal of these funds is to provide as much capital
appreciation as possible during the tenure of the fund.
Most mutual funds offer growth or dividend/income as options
under the same fund, meaning that an investor can choose whether to receive
regular payments (dividend/income) or reinvest the money that
would otherwise have been paid to him as a dividend back into the fund itself
Investors who aren’t planning to retire or pull out of their investments
anytime soon, and possess the ability to take risks, are the ideal investors
for this type of fund.
b. Income Funds: These
funds aim to provide investors with regular income, generated
through investments in government securities, stocks with high
dividend potential, bonds, debentures, etc. While it’s true that no
mutual fund scheme can outright guarantee results, these funds are actively
managed and hence are more likely to successfully generate regular
Investors with a low risk appetite who are looking for a place to park
surplus funds for a short to medium term can consider these funds, as
they provide a regular income. Generally, pensioners, super safe investors, and
beginners in the world of mutual fund investments chose these funds.
c. Liquid Funds
The primary goal of these funds is to provide capital safety and
near-instant liquidity to its investors. These funds primarily invest
in debt instruments of a high credit quality and design the
portfolio to mature in around three months’ time. Thus, interest rate
fluctuations in the economy do not affect this fund as much as they do for
other funds as the maturity of invested instruments is lined up with the
maturity of the scheme itself. Even so, no mutual fund scheme can
These funds have a huge potential in generating income more than regular
savings bank accounts which provide around 4% - 5% on average.
d. Tax-Saving Funds or ELSS:ELSS
or Equity Linked Savings Schemes are mutual fund schemes whose primary aim is
to generate long-term capital growth through investments in
equities, stocks and shares. Investments made in ELSS are also eligible
for deductions under Section 80C of the Income Tax Act, 1961.
Most Indians invest in tax saving fixed deposits, which provide earnings at a
predetermined rate of interest and also serve to save a portion of income from
taxes. However, tax saving fixed deposits have a lock-in period of 5 years,
while tax saving ELSS have a lock-in period of only 3 years, and, historically
have provided better returns.
e. Capital Protection Funds
The primary aim of capital protection funds is to protect
investors’ capital in the event of economic instability, while also
providing the possibility of capital appreciation and growth. These
funds invest primarily in bonds and zero coupon debt although
there is a small portion invested in equity as well.The
Unstable movements of interest rates is countered by aligning the maturity of
the debt portfolio and the maturity of the fund itself.
These funds are close-ended, and cannot be interfered with during their term -
which can be 1 year, 3 years, or 5 years. It should be noted that there is no
institutional coverage or guarantee that these funds will perform as
advertised, but historical performance of these funds suggests that they’re
f. Fixed Maturity Funds: Usually
compared with fixed deposits, fixed maturity funds are close-ended funds that
invest primarily in debt instruments which have a predetermined
maturity date. The maturity date of the debt investments are made to coincide
with the maturity of the fund itself. Unlike most other debt funds, there is no constant purchase and sale of debt securities. Instead, these
funds adopt a buy-and-hold strategy which helps them reduce the overall
These funds are very similar to fixed deposits in that they are debt
instruments that lock in funds for a predetermined tenure and provide tax
benefits.Unlike fixed deposits that provide assured returns, fixed
maturity funds provide indicative returns at the time of buying in. This means
that the real returns could fluctuate and eventually be higher or lower than
what was initially indicated. As far as taxation goes, fixed maturity plans
offer a dividend or growth option, and are either
taxed for dividend distribution tax or capital gains tax, as the case may be.
3. Types of mutual funds based on risk factor:
a. Ultra low-risk mutual funds:
Mutual funds like ultra-short-term
funds and liquid funds, etc. do not present a lot of risk but generate
returns above bank fixed deposits/ savings bank account.
b. Low-risk mutual funds: Funds
like arbitrage funds and low duration funds favour investors
with a low risk appetite.
c. Medium-risk mutual funds:
Funds in this category generally have balanced investment portfolios, meaning
that they divide the corpus between equity and debt instruments.
Thus, the fund can provide long term capital gains, as well as stability.
Medium-risk funds cannot make the most of equity, as the risk is offset by
investments in debt instruments as well.
d. High-risk funds: These
are funds that offer the highest potential rewards and as such carry the
highest amount of risk. The primary focus of these funds is to maximise
potential returns through investments in equities,
which are volatile by nature.
4. Specialized Mutual Funds:
Index Funds:These funds
invest their corpus into the stocks that comprise a particular
index. Index funds aren’t actively managed, which means they simply
replicate the index. As such, are less exposed to the negative effects of
equity-related volatility. This does away with the need for active
investment management. The fund returns are generally close to index
returns. But, in the case of a market downturn, the index fund will also lose
its market value.
The benefit these funds reap by not being actively managed is that the expense
ratio comes down.
a. Fund of Funds: As the
name suggests, these funds invest in other mutual funds instead of
directly investing in equity and debt instruments. This kind of
investment management is often referred to as multi-manager
investment management. These allow investors to diversify risk across
various funds the fund of funds invests inInternational fund of
funds (or foreign fund of funds) as the name says comprise of
investments in foreign funds holding stocks/bonds of international companies or
international mutual funds.
b. International Funds or Foreign
Funds: The primary aim of these funds is to maximise
returns and minimise losses caused by domestic market fluctuations.
With a foreign fund, investors can take advantage of the burgeoning markets in
other countries, even if the market in the home country is experiencing
setbacks. Funds can fully invest in foreign companies, or partly invest in
foreign companies and partly in domestic companies or partly or wholly in
international mutual funds.
c. Global Funds: These
funds aim to generate maximum returns through investments in funds all over the
world. These global funds invest in the best funds, worldwide, and
in the investor’s home country as well. These are the widest and most
diversified funds in the sense that currency variations, national policies, and
market fluctuations of many countries need to be considered and tracked.
Despite the obvious managerial challenges, these funds have provided
historically high returns as they invest in the top stocks and funds,
d. Emerging Market Funds: These
funds aim to take advantage of the higher growth rate displayed by
emerging and developing economies of smaller nations in order to
generate higher returns. While these investments are on the riskier side, it is
clear that investments through the next decade will be dependant on these
emerging markets to generate returns, as their economic growth rate is far
greater than that of established economies like the US and UK.
e. Sector Funds: The primary aim of
these equity-based funds is to generate returns from investments in
one specific sector ((for example pharmaceuticals or financial
services). These funds are basically the opposite of diversified equity funds,
as they focus on one specific sector rather than many. Logically, putting all
of one’s eggs in one basket is a recipe for disaster, but many investment
experts have an in-depth understanding of various sectors, and have
historically proven that sector funds can provide massive returns, even higher
than some diversified portfolios, provided market entries and exits are timed
well. These funds are suitable for investors with a very high risk appetite.
f. Thematic Funds or Theme-Based Funds:
Similar to sector funds, these funds focus their investments into
companies that revolve around a particular theme. Unlike sector funds
which invest only in companies within a particular sector, these funds invest
in companies across sectors, which are united by a common theme. For example, a
pharmaceutical sector fund would invest only in pharmaceutical companies, but a
thematic fund in the same pharmaceutical space would invest in chemical
processing companies, research laboratories, healthcare providers, etc. as well
as pharmaceutical companies.
g. Asset Allocation Funds: The primary
aim of these funds is to maximise returns through the perfect
allocation of investments in various asset classes - like equity, debt,
fixed assets, bonds, real estate, gold, etc.
These funds are basically hybrid funds tailored to the investors
profiletaking into consideration everything about the investor like
age, risk appetite, current net worth, investment goals and financial goals,
etc. and also the current trends and condition of the market itself. Some Asset
Allocation Funds are funds of funds, and as such carry a greater expense ratio.
There are two primary types of asset allocation funds - Dynamic and
Static.Dynamic Asset Allocation Funds are able to adjust the number of
assets that comprise the portfolio, depending on prevailing market conditions.
Static Asset Allocation Funds, on the other hand, decide their investment
strategy and level of investments to be made in different asset classes well in
h. Exchange Traded Funds (ETFs): These
funds are slightly different than other mutual funds. ETFs own
stocks, bonds, commodities, etc. and ownership of the fund is held in the
form of shares by shareholders. This is because ETFs are traded just
like stocks in stock exchanges. Shareholders cannot directly own the
underlying assets in which the fund is invested, but rather indirectly own
these assets through owning shares of the fund itself. ETFs provide greater
liquidity as they can be bought and sold on the stock exchange and have lower
ETFs can only be bought or sold directly from or to authorized
participants (APs), after an agreement has been entered into. APs are
usually massive investment houses, who use creation units to
conduct trades of their ETF holdings. Creation units are massive chunks of
thousands of ETF shares.
The primary advantage of these ETFs is that units in the funds themselves can
be traded on the stock market quickly to make the most of market fluctuations.
ETF units are freely tradeable for the assets that make up the ETF, thus, the
value of the ETF’s units does not vary much from the value of its owned assets.
Most retail or individual investors buy ETF units from the exchange once it is
listed and not creation units.
5. Mutual Funds based on structure:
a. Open-Ended Mutual Funds:
As the name suggests, open-ended mutual funds allow investors to
buy and sell units of the fund as per their convenience and feelings
about the market. Investors in open-ended funds can also exit the fund at any
time, at the fund’s current Net Asset Value (NAV). While these funds offer
great flexibility, it also means that the unit capital of the fund
undergoes constant changes with investors buying into - and selling out
of - the fund with little to no prior warning.
b. Closed-Ended Mutual Funds: With
closed-ended funds, the total unit capital, fund tenure, investment
avenues, etc. are all decided in advance of the fund units being
offered for purchase. Once the purchase window has closed, investors remain
invested until the completion of the fund’s tenure. Units cannot be bought or
sold during this time.
c. Interval Funds:
These funds allow investors to enter or exit the fund at
predetermined intervals, decided by the fund house. While these funds
have a certain amount of liquidity, they should not be considered a liquid
investment, as they cannot be redeemed at any time, only during specific
intervals. Even so, they combine the benefits of open and closed ended funds,
and have some added benefits like the fact that they can also invest in private
assets and assets that aren’t listed on any exchange.
What is a mutual fund?
There are thousands of mutual funds in India handling thousands of crores of Rupees.
Mutual funds are an investment tool that pools money from several investors and invests it in
company stocks, bonds, government instruments, etc. in order to generate a profit for
investors. This profit may be paid out as dividends to investors (dividend plans) or reinvested
by the fund for capital appreciation (growth plan), There are many different types of mutual
funds based on various characteristic differences. Most mutual funds try to diversify their
investments into as many different companies and industries as possible, and some invest in
only specific industries and sectors of the economy. Some funds aim for high-risk-high-reward
strategies, while some opt for low-risk-regular-income strategies. There’s a huge variety of
funds to choose from, and a large number of Asset Management Companies (AMCs)/fund houses. that
offer excellent schemes for all types of investors. Some banks and financial distributors also
sell mutual funds.
How do mutual funds work?
Different types of mutual funds operate slightly differently from one another, but they all
have some basic principles on which they operate that define them as mutual funds.
The most basic way in which mutual funds operate is explained below:
1. An asset management company (AMC)/fund house identifies a potential earning possibility in
the market and calculates the risk and potential reward involved in this particular investment.
2. The AMC studies other related investment opportunities that could boost the value of - or
ensure the success of - the main opportunity.
3. The fund manager working for the AMC picks and chooses different investments in order to
balance out the risk and total earning potential - balancing the right high risk-high reward
equities with high safety-relatively consistent income securities.
4. All the details about the fund including risk factors are well documented and presented to
the industry body SEBI for regulatory approval and to the public for consideration.
5. The fund scheme is made available to the public, who then buy into the fund by purchasing
fund units. The more fund units are purchased, the larger the investment, and thus the greater
the proportion of potential income.
6. The investments are made and, depending on the fund’s structure, the fund will either be
passively or actively managed by a fund manager.
7. Under the dividend option, declared dividends are proportionally distributed amongst
investors. Under the growth option, dividends are reinvested for capital appreciation.
8. At the end of the fund’s tenure, capital gains are paid out to the investors.
Now let’s understand basic mutual fund operation with an example:
Let’s say that there’s a huge national demand for 50 lakh units of bottled water per month,
but the water bottling plant can only produce 1 lakh units per month. Suppose that the
bottling plant can meet this demand if it has a new bottling machine - it can earn a
massive profit from supplying the demand. Unfortunately, the bottling plant does not have
the funds to purchase this new machine - so it seeks investment. This is an opportunity for
a win-win situation for any investor who has enough wealth to help the bottling plant
purchase the machine. In most cases, individual investors won’t have the requisite funds to
purchase large machinery, so, a few investors get together and pool their funds to buy the
machine, and will split all profits equally amongst themselves, or in proportion of the
amount they’ve invested.
Once the machine has been purchased, the investors must wait for the bottling plant to
integrate the new technology and start producing enough units to meet the demand.
Now that the bottling plant has met the demand of 50 lakh bottles per month - which is a 50x
increase in supply - it will obviously be earning a lot more income for the sale of its
product. Since the expansion of this bottling plant was enabled by the purchase of a
machine, which was enabled by the foresight of certain investors - the investors will get
to claim a share of the new profits enjoyed by the bottling company.
This basically explains how an investment helps a company grow, but mutual funds take it a
step further. Mutual funds don’t just invest in one or two companies, but in hundreds of
companies across different sectors of the economy. In addition to the bottling plant, the
same mutual fund scheme may have invested in a transportation company, enabling quicker
movement of bottled water from the factory to the distribution centres. In addition to the
transportation company, the same mutual fund scheme could also have invested in an
advertising agency that promotes the sale of this particular brand of bottled water -
ensuring smooth sales from distribution centre to end customer. In this way, a mutual fund
takes care of most aspects of its investment and tries to ensure its success.
Now since it’s a mutual fund, it can have two options by which investors can enjoy their
profits - growth or dividend. Under the growth option, all earnings made by the fund are
reinvested in the fund itself, and the capital invested is allowed to grow until the tenure
of the investment is completed or the investor chooses to redeem the investment. Under the
dividend option, the bottling plant will declare income, and dividends will be distributed
amongst the investors.
Now, suppose that the demand for water suddenly dropped from 50 lakh units to 10 lakh
units, but the machine had already been purchased and is now running on lower capacity, or
the machine purchased was faulty, or there’s a labour strike preventing water from being
bottled - the profits generated will not be as high as expected, and returns for investors
will be low, and investors could also lose money. This is called a risk factor, and is one
of the major defining characteristics of any mutual fund scheme. Risk must be thoroughly
studied in order to mitigate it, and even then, great care must be taken to invest the
right amount at the right time in the right place.
This is basically how a mutual fund works - large amounts of money are pooled together to
invest in companies/ government instruments that can generate a profit as a result of
increased capacity, capability, etc. enabled by investments.
Should I invest in mutual funds?
Mutual fund investments are for anyone who wishes to be richer than they currently are -
through smart investments.
Investors can begin with as little as Rs.1,000 to invest in really good mutual fund schemes,
depending on their goals. Funds selected could vary in terms of time available to reach goals
(short, medium, or long term), amount of funds ready to invest, amount expected at the end of
the investment tenure, amount of risk the investor is prepared to undertake, type of industry
diversification required, type of asset class desired. There are also funds called Equity
Linked Savings Schemes or ELSS that allow investors to claim tax deductions under Section 80C
of the Income Tax Act, 1961.
Mutual fund investments allow for wealth creation while offering several benefits of
diversification, professional management, low cost, etc.
There are many different types of investors, some who like to take risks for the possibility of
earning high returns, some who don’t like taking too many risks but wouldn’t mind mid-sized
returns, and some who prefer little or no risk and only wish to earn relatively stable, but
higher than bank interest from their investments. Whatever the type of investor, there are
thousands of mutual funds out there to choose from.
Investing in mutual funds is no longer the ‘new’ way to get rich, it’s a tried and tested
method with standard practices that have helped millions of people around the world meet their
Funds can be held for the short-term, medium-term, or long-term. Investors can stay invested
for as long as they like, although data has proved that staying invested for the long-term
schemes minimises the chance of losses and can provide the greatest overall earnings thanks to
the power of compounding! Small and medium term investments can help you meet short and medium
term goals as well.
How to invest in mutual funds?
Once you’ve decided to invest in a mutual fund, you must decide which fund to invest in, and
this is the most time-consuming part of the process.
Below is a step by step guide on how to choose the best fund for you:
1. Investment Goals: Fully define your
investment and financial goals - “I would like to have earned Rs.x in ‘x’ number of years. I
can take ‘x’ degree of risk”
2. Risk Factor: Understand how much
risk you’re willing to take in order to reach your financial goals - understanding this is the
key to choosing which type of mutual fund you will eventually invest in. High risk investments
have the potential to provide the highest returns, but also come with the possibility that the
invested capital could be lost. Medium risk investments will try their best not to lose the
invested capital, but in doing so will reduce the amount of funds available to invest in
growth-generating investments (which are risky by nature). Low risk investments will expose the
capital to the lowest amount of risk possible. Understanding one’s risk appetite is vital to
being investing correctly, and is called risk profiling.
3. Asset Allocation: After discovering
your risk profile and narrowing down your potential investments, you must decide which asset
classes you wish to invest in.Stocks and shares of companies are the first and most popular
asset class among risk takers - also called equity - investments in this asset class usually
carries a greater amount of risk and also the potential for higher earnings. The second asset
class is fixed-income securities or bonds, and is the most popular among risk-averse investors
who prioritize the safety of their investments. These assets provide regular income and capital
safety. The third asset class is money market instruments or cash equivalents which provide
liquidity and a certain degree of safety. The fourth main asset class consists of commodities
and real estate. A mutual fund will invest in all these asset classes proportionally, in order
to provide safety as well as maximise growth potential.
4. Picking the right AMC: Choosing the
right asset management company (AMC)/fund house/bank/etc. can be as important as picking the
right fund. Make sure that the company through which you’ve chosen to invest has a proven track
record and has a roster of qualified and experience fund managers - this will ensure that your
money is handled by capable professionals who have faced different market conditions in the
past and can actively manage your fund and keep it away from danger. The right AMC will also
have a large ‘family of funds’ to choose from, or to shift between, depending on the
performance of your invested fund.
5. Picking the right fund: Picking the
right fund is a combination of understanding your investment goals, risk profile, asset
allocation, and total investable corpus - and matching those to mutual fund schemes (among
thousands available) which has the ability to provide returns in line with your goals. This is
the most time consuming, but most rewarding part of the process, as you will learn about
different funds and the different unique features that some of them offer. Once you’ve narrowed
it down, you can also check how it’s performed against its benchmark and how consistently it
has performed, before putting your hard earned money in it. will have to match the funds
against a benchmark to see how they have performed in the last 5 to 10 years, and take
historical performance into account as well.
6. Approaching the AMC/Fund House/Bank: Once
you’ve decided the fund you want, all you have to do is approach the AMC/bank,fund house
offering the fund and purchase fund units in exchange for money. Alternatively, you could
invest online through a paperless, fast, and secure platform like FundsIndia.
Investing in mutual funds online
You can either follow this process, or try the intuitive online investment platform offered by
FundsIndia - which assess your requirements and provides the best and top performing funds for
you to choose from. The online service is totally free, totally paperless, 100% secured online
and lightning fast.
Mutual fund investments done online are also quicker and do not require you to step out of your
comfort zone for any document verification or fund transfer. The entire process is handled
efficiently online. FundsIndia has an award-winning team of market research analysts, financial
gurus and investment experts who will direct your funds into the most rewarding mutual funds.
You can also access all the FundsIndia investment facilities on your smartphone through the FundsIndia Android App.
Are mutual funds better than stocks?
Mutual funds and stocks are both investment
avenues that help generate wealth. To answer this question, it’s important to understand what
exactly both these investment types are - and what differentiates them from each other.
Mutual funds are investment opportunities
wherein a group of people (investors) pools their wealth and invest in a mutual fund scheme.
Mutual fund schemes are of many types, but all of them function on a similar principle of
pooling in wealth from many investors to create a large investable amount. The mutual fund
scheme is run by a fund manager who decides where the fund will invest and is thus responsible
for any positive or negative gains the fund generates. This type of investment varies the risk
undertaken by the investor and tries to maximize returns and minimize risk.
Stock investments are investment opportunities
wherein individual investors decide to invest in specific individual companies. The stock sold
by the company is a token of ownership in the company itself, and the value of a person’s stock
investment is directly tied into the performance of the company. This investment does not
actively manage risk.
Mutual funds are better than stock investments
because mutual funds manage the element of risk and have a more realistic change to provide
positive returns to the investor.
Are mutual funds safe?
All investments are risky because the market is
unpredictable and is dependant on many factors outside the control of the investor. There are
many different types of mutual funds that invest in different companies, in different ways, and
even in different proportions of equity and debt.
Mutual fund managers actively manage the
investments of a certain mutual fund scheme and monitor the risk and reward possibilities on a
Mutual funds are a safer place to invest than
the stock market, but not as safe as some investments with guaranteed returns such as post
office FD, etc.
Can you get rich investing in mutual funds?
Yes, you can get very rich investing in the
right mutual funds at the right time for the right amount. There are many resources online that
can educate you in the process of picking the best fund. Online investment houses also have
excellent market insights and analytics to guide this decision-making process.
FundsIndia has a state of the art robo-advisor
that analyses the markets and provides an unbiased view of the best investment opportunities.
How do beginners invest in mutual funds?
The easiest and most practical way to invest in mutual funds in 2018 is:
Step 1: Log on to an online mutual fund platform like FundsIndia.com and
create a free profile.
Step 2: Enter your information like name, DOB, address, bank account details,
Step 3: Upload KYC documents.
Step 4: Speak with the mutual fund investment expert and market analyst to
determine your individual goals and the amount of risk you’re willing to take.
Step 5: Invest and watch your money grow!
It’s really that easy to get started investing in mutual funds with FundsIndia.
How do beginners invest in stocks with little money?
To start investing in stocks, follow these easy steps:
Go to www.fundsindia.com
Create a free account and upload your KYC documents.
Talk to the team of award-winning market analysts and investment
experts to decide which stocks to invest in.
Invest in your chosen stocks and track your investment on the
Relax and watch your money grow.
How do I invest my money to make money?
Working hard is one way to make money, but in
order to grow that money into more money, one must invest it. To grow rich faster than any
traditional method of wealth generation, online investment portals like FundsIndia are gaining
popularity as they allow users to invest quickly over the internet with 100% security.
If you want to invest money to make money - log
onto fundsindia.com and create a free account. A member of the investment and market research
team will then contact you to help understand what your investment goals are, and how best to
How do you make money from a mutual fund?
A mutual fund scheme invests in certain
companies and opportunities. When these invested companies perform well, or the opportunities
pan out in a positive way, the fund scheme earns a share of that prosperity. The share so
earned is then divided amongst all investors in proportion to their investment.
How much money do you need to start investing
in a mutual fund?
You can start investing in mutual funds and SIP
with as little as Rs.1,000.
How much should I invest in mutual funds?
How much to invest in mutual funds largely depends on three factors:
1. How much you have available to invest after deducting living expenses.
2. How much risk you are willing to undertake.
3. For how long you wish to remain invested.
Experts recommend investing 80% of your monthly
surplus (amount remaining after deducting for monthly living expenses) into mutual funds either
through lump sum or SIP.
How mutual funds work with example?
Mutual funds pool money from many people and
invest this money into companies and opportunities to make money. The money earned is then
divided among the investors in proportion to their investment.
For example: Ten people have invested Rs.50,000
each into Mutual Fund Scheme A. The fund manager of the mutual fund scheme then identifies
certain companies and opportunities in which to invest this money. Let’s say that the fund has
invested in 4 companies and 1 opportunity:
“ABC” sports apparel brand (company)
“DEF” sports drink brand (company)
“GHI” stadium (company)
“JKL” transport solutions provider (company)
“MNO” football team (opportunity)
If the mutual fund manager identifies the right companies among the competition - s/he could be
funding the training of the “MNO football team” to make them better players and running an
advertising campaign around the team using “ABC sports apparel” and drinking “DEF sports
drinks”. This marketing will lead to these brands being associated with each other and the
positive performance of the team will lead to a positive rise in the sales of “ABC” and “DEF”
companies. In addition, if the fund has invested in a stadium, a portion of the positive
collections and profits of that stadium will be diverted to the fund. If the fund owns a stake
in a transportation company, the profits earned by “JKL” transportation company while ferrying
fans to and from the “GHI stadium” will also benefit the fund scheme. Thus, just by increasing
the quality and level of coaching in the “MNO football team”, the fund scheme has managed to
generate profits from a total of 5 avenues - profits that are then redistributed among the
investors in proportion to their investment.
How safe is it to invest in mutual funds?
It is very safe to invest in mutual funds.
There are thousands of mutual fund schemes in which you can invest. There are funds that expose
your invested amount to a minimal amount of risk, but generate relatively lower returns and on
the other hand, there are some funds that expose your invested amount to a lot of risk for
potentially greater reward. The riskiness of the investment is always mentioned clearly in the
scheme offer document.
The safety of your invested amount depends on
many factors like the type of fund, classification of asset type, the fund manager, etc.
Is it a right time to invest in mutual funds?
It is always the right time to invest in mutual
funds. You may have heard of fund managers and investors waiting to “time the market” correctly
before they make their investments - you don’t need to do this - simply ask one of FundsIndia’s
investment experts and market analysts which are the best funds to invest in at any particular
time. At any given time, there will be certain funds performing poorly and certain funds
performing exceptionally well.
Also, in the case of SIPs - the benefits of
Rupee Cost Averaging and regular investment installments means that timing the market is of
Is it good to invest in a mutual fund?
Yes, it is good to invest in a mutual fund as
the money you invest will be given a chance to grow and make you richer.
Is it safe to invest in mutual funds online?
Yes, it is safe to invest in mutual funds
online through FundsIndia - the website uses bank-level security and encryption to ensure
safety and security.
What are the benefits of a mutual fund?
- Mutual fund investments can multiply your wealth.
- Minimal risk as compared to other investments.
- Portfolio diversification is possible - meaning that you don’t put all your eggs in one
- More chances of success and profitable returns thanks to investment diversification.
- Mutual funds are actively managed and employ a professional fund manager whose performance
parameters are directly linked to the performance of the fund scheme.
Investments in a mutual fund through a particular AMC can be switched - meaning that the
investment can be redirected into another mutual fund scheme at any time depending on market
- ELSS investments can help you save up to Rs.1,50,000 from taxation under Section 80C.
- Mutual funds provide higher potential returns than any other type of investment avenue.
- Mutual funds can be invested through a method called SIP
- Systematic Investment Planning - which carries a host of benefits
to the investor.
What is the average return on mutual funds?
There are thousands of mutual fund schemes that
offer varying levels of returns. Usually, the higher the returns, the higher the risk being
undertaken. The returns of a mutual fund scheme vary based on many other factors as well, but
the average returns generated over a certain period of time, say, 5 years, is much higher than
other investments with similar lock-in periods such as FDs.
Which is better mutual funds or stocks?
Stocks and mutual funds are two entirely
different types of investments and suit different types of investors. Some differences between
the two are given below:
- Stocks are riskier investments than mutual funds but offer the chance for greater rewards.
- Stock investing requires a demat account, mutual funds do not.
- Mutual funds can be invested through SIP.
- The stock exchange is a quicker market, mutual funds usually require the investor to remain
invested for a certain minimum time period.
- Mutual funds can have stocks as a part of their investment portfolio.
Which mutual fund is best in India?
There are thousands of mutual funds schemes and
the value of these changes every day, to find and invest in the best mutual fund scheme just
log on to www.fundsindia.com
the best performing funds.
Which mutual fund is best to invest now?
If you wish to invest in a mutual fund scheme
right now, just log on to www.fundsindia.com
create a free account, and start investing.