Mutual Funds Guide
One of the first tasks a parent or even a financial advisor will advise you to do when you first start earning, is to invest a part of your income. Accumulating wealth over a period of time is almost always, difficult to achieve just by earning a salary and saving a part of it.
An arbitrage fund is classified as an equity fund for tax purposes but it is virtually a fund that mirrors debt market returns. But what exactly is an arbitrage fund? Let us look at this category of funds in detail?
It is quite common to use the terms money market funds and liquid funds interchangeably. The differences are minor and for the purpose of understanding you can just ignore the difference at this point of time.
Monthly Investment Plan (MIP) is an investment instrument specially designed for conservative investors.Among the various types of debt funds available in the market, one of the most popular has been the Monthly income plan or MIP. While MIPs as a debt product gives higher returns than traditional bank FDs, they are not an assured return product, as is normally perceived. Let us delve deeper into MIPs.
There is a popular saying in Wall Street that “Gentlemen and governments prefer bonds”. Referred to by various names like bonds, debt and fixed income instruments, they essentially mean the same thing.
When classified based on market capitalisation, equity funds can be divided into large-cap, mid-cap, and small-cap funds.
Have you ever wondered as to what exactly is a mutual fund? You can understand a mutual
fund as a pool of resources managed by an expert fund manager so as to diversify your risk
and help you earn consistent returns over time.
Equity funds are one of the most popular types of mutual funds among investors. Owing to their high-
return potential, many include it in their investment portfolio. However, there are various types of
equity funds, based on their characteristics and risk-reward potential.
As the name suggests, the systematic investment plan (SIP) is a gradual and disciplined
method of investing in a mutual fund. For example, you decide that you can afford to save
Rs.5,000 per month.
If you are aiming for long-term wealth creation or want to build a diversified portfolio, equity funds can be a great option. Read this post to know what they are, how they work, and who should invest in them.
Hybrid Mutual Funds
As the name suggests, balanced or hybrid funds are funds that invest in two or more asset classes as per the investment objective and other factors.
If you cannot leverage the volatility of the equity market on your own, arbitrage funds can do it for you. Check out this post to know 10 of the top-performing arbitrage funds that you can consider for 2020.
As the name suggests, Hybrid funds are a combination of equity and debt features into a single fund.
ELSS Mutual Funds
Equity Linked Savings Scheme is a type of diversified mutual fund. While the schemes have maximum exposure in equity and equity-related instruments, a part of the investment is made in the debt market.
An Equity Linked Saving Scheme (ELSS) is an equity mutual fund with a tax benefit on investment. The taxation of the dividends and the capital gains will remain the same
ELSS or Equity Linked Savings Scheme is similar to any other diversified equity mutual fund except that it comes with a 3-year lock-in period and tax advantage. You can also invest in an ELSS fund through an SIP or Systematic Investment Plan.
One of the biggest advantages of investing in mutual funds is the fact that there are schemes to suit every type of investor.