Build Wealth With Mutual Fund

A mutual fund pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its portfolio.

What is Mutual Fund?

A Mutual Fund is an investment vehicle through which many investors pool their money to invest in a range of financial securities such as stocks, bonds, money market instruments, etc., in line with the investment objectives agreed upon between the mutual fund and the investors.

Asset Management Companies run mutual Funds. A professional fund manager manages investors' money. He uses his knowledge and experience to invest money in various financial instruments and securities.

▶ Mutual Funds help investors build their wealth by enabling them to participate in various market opportunities.

▶ The money raised from the investors goes to the government, corporates, banks, and other entities, which helps them invest in projects and fund expenses.

WHY SHOULD YOU INVEST IN A MUTUAL FUND?

▸ Diversification: A mutual fund spreads your money across various securities. It ensures that all your eggs are not in one basket, thus reducing the investment risk. So is tough to practice for an individual investor.

▸ Wide Choice: In India, 43 mutual funds AMCs offer various mutual fund schemes. So, a plan is available for every risk, return appetite, and time horizon.

▸ Safe & Convenient: Investors can structure their investments according to their liquidity and taxation requirements. Further, an investor can withdraw his investment fully or partially anytime from the mutual fund. Mutual fund transactions are safe as they are carried through your bank account.

▸ Well Regulated: SEBI regulates Mutual Funds. The latter has mandated strict checks and is refining rules and regulations to keep checking mutual funds' activities, ensuring investors' protection.

▸ Tax Savings: Investment in ELSS Mutual Fund Schemes is eligible for deduction of up to R1.50 Lacs p.a. under Section 80C of the Income-tax Act. Further, the ELSS scheme has at least a lock-in period of 3 years among all tax-saving instruments.

▸ Online Transactions: All mutual fund transactions can be executed online through a Demat account. Now we can do an MF transaction from your smartphone, and no paperwork is involved.

▸ Systematic: Option to invest through SIP & STP and withdraw through SWP.

▸ Tax Benefits: Long-term capital gain in MF is nil. If you invest in an equity MF scheme for one year or more, you don't have to pay any taxes on returns.

Units

The total money collected from the investors by a mutual fund is the scheme's capital, which breaks down into units. The investor is issued units of the plan. Shares represent the extent of equity ownership in a company, and unit represents ownership in a mutual fund.

NAV

Net Asset Value (NAV) is the value per unit of the mutual fund scheme. It is the leading performance indicator of a plan. If the strategy is profitable, the NAV increases; if the goal is to lose, the NAV goes down.

NAV represents the market value of the securities in the scheme's portfolio. Mutual Fund units are bought and sold based on the NAV of the plan. NAV is updated and published daily in at least two nationwide newspapers. You can view your scheme's latest NAV anytime from the AMFI and other websites.