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Friday, July 9, 2021

Top 10 Mutual Funds in India for Invest

 Top 10 Mutual Funds in India for Invest 


Who should invest in the best mutual funds?

  Mutual funds should be considered as an investment option by everyone at some point in their lives.  Investing in mutual funds is one of the best ways to achieve your goals.  Each mutual fund comes with some objectives to achieve.  So, whenever you are thinking of investing in a mutual fund, you have to make sure that your objectives are consistent with the funds being considered.



  Investing through SIPs reduces the need to manage a single amount.  So, you can start your investment journey with a small amount.  There are mutual fund schemes that allow you to invest up to Rs.100 per month through SIP.  This option is not available with most investment options.


  Each investment option comes with attached risk.  Any investment including deposits is not completely safe.  The level of risk of mutual funds varies in different types, as it is directly dependent on the underlying assets.  Therefore, you should only invest in a mutual fund plan if you are willing to take the risk attached to it.


 The risk received by the best mutual funds

  As mentioned earlier, the level of risk of mutual funds varies in different types.  Equity funds carry the highest levels of risk as they invest mostly in equity shares of market capitalized companies.  These funds are easily influenced by market activity.



  The following are the types of risks associated with equity funds:


  Market risk


  Market risk is the risk that can result in losses due to over-performance of the market.  Several factors affect market activity.  A few names;  Natural disasters, viral outbreaks, political unrest and so much more.


  Concentration risk


  Concentration usually refers to emphasizing a particular thing.  It is never advisable to focus your investments on a particular company.  There is no doubt that focusing your investment on one area is beneficial when that area performs well, but if there is a reversal, your losses will increase.



  Interest rate risk

  Interest rates fluctuate depending on the availability of credit with the lender and the demand of the borrower.  An increase in interest rates during the investment period may result in a fall in the price of securities.

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  Liquidity risk

  Liquidity risk refers to the difficulty in getting out of a safety holding in view of the loss.  This usually happens when the fund manager fails to find buyers.


  Credit risk

  Credit risk refers to the likelihood of a situation in which the issuer of a security fails to pay the interest promised at the time of issuing the securities.  You can measure credit risk by looking at the credit ratings offered by various credit rating agencies.


  The following are the types of risks associated with equity funds:

  Interest risk

  Interest rates are likely to vary.  This can be due to various factors.  The change in interest rates has a direct effect on the returns offered by the underlying securities.


  Credit risk


  The principal is likely to issue defaulted securities on payment of interest at the agreed rate at the time of issuance of principal and securities.

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  Liquidity risk

  There is a possibility that the underlying securities may become liquid and the fund manager may have difficulty in selling the securities held under the portfolio.



The benefits of investing in the best mutual funds


  Expert money management

  Mutual funds are managed by a fund manager, so the chances of making a profit are higher.  Each fund manager is supported by a team of analysts and experts who do research and select the best performing instruments to include in the fund portfolio.  Therefore, you do not need to have market knowledge.

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  Option to invest a small amount on a regular basis


  The biggest advantage of investing in mutual funds is that you can stop your investments over time by taking the path of SIP or systematic investment plan.  Through SIP, you can invest a fixed amount of Rs. 100 on a regular basis.  This reduces the need to arrange a solitary sum to begin with your investment journey.



  Diversification

  When investing in mutual funds, you will automatically diversify your portfolio across a number of tools.  Each mutual fund invests in a variety of securities, exposing investors to a diverse portfolio.


  Can redeem at any time

  Most mutual fund schemes are open-ended.  Therefore, you can redeem your mutual fund units at any time.  This ensures that investors are provided the benefit of liquidity and hassle free withdrawal at all times.

Read Full News Report About Mutual Funds


  Well controlled

  All mutual fund houses are under the jurisdiction of the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI).  Apart from this, the Association formed Future Mutual Funds in India (AMFI), also oversees self-regulatory, fund schemes formulated by fund houses.  Therefore, investments made in mutual funds are safe.


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  Tax-efficient

  If you want to save tax under the provisions of Section 80C of the Income Tax Act, 1961, then you can invest in an Equity-Linked Savings Scheme (ELSS) or a Tax Savings Mutual Fund.  These mutual funds offer tax deductions of up to Rs 1,50,000 a year, which helps you save up to Rs 46,800 in a year.


 Tax on the best mutual funds

  Dividends provided by all mutual funds are added to your gross income and you are taxed according to the income tax slab.  The capital gains tax rate on the sale of mutual fund units varies between mutual funds and holding periods.


  Here's how to tax equity funds:

  If you sell your equity fund units within a one-year holding period from the date of purchase, then you realize a short-term capital gain.  These benefits apply at a flat rate of 15% regardless of your income tax slab.  Redeeming your equity fund units after a one-year holding period gives you long-term capital gains.  Long-term capital gains (LTCG) up to Rs 1 lakh per annum are exempt from tax.  Any LTCG above Rs 1 lakh per annum is taxed at a flat rate of 10%, and there is no benefit to the indexation provided.


  Here's how debt relief works:

  The advantage of selling debt funds units over a three-year holding period is known as a short-term capital gain.  These benefits are added to your gross income and are taxed according to your income tax slab.  You get a long-term capital gain on the sale of your debt fund units after a three-year holding period.  These benefits are then taxed at a flat rate of 20%.


  Here's how a balanced fund can be taxed:

  The rate of profit tax levied on the sale of units of balanced funds is subject to their equity.  If the equity exposure of a balanced fund is more than 65%, it is levied like an equity fund.  If not, the tax rules of debt funds apply.  Therefore, when you invest in a hybrid fund, you must know its equity exposure.

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