INVEST IN MUTUAL FUNDS

HOW TO SELECT A SCHEME TO INVEST?

There are 44 AMC and about 2500 Schemes that are available with the indian Mutual fund industy, which Unfortunately,makes selection very difficult. Based on the investment objective you can select equity, debt or balanced fund. Investmentz help you to select the scheme based on your investment objective. Click here for our recommendations.

You can invest in lumpsum or set up a SIP for investing. It is advisable to set up an SIP so that there is regular investment and you are able to average out your investment price.

HOW TO INVEST?

You need to open an investment account with a broker, along with a depository account. Mandate should be given to your bank to debit a fixed sum (in SIP mode ) every week or Month and invest in the mutual fund that you have selected.

Open an Account

SAFETY

Mutual funds are regulated by SEBI. They must strictly invest as per the scheme document filed by them with SEBI. However mutual fund investment is subject to market risk and past performance is not guaranteed in future. Your capital may reduce or appreciate based on the performance of the underlying market. Mutual funds regularly report to SEBI their performance.

RETURNS

Mutual fund returns are in the form of capital appreciation /Dividend . Funds pay dividend (in dividend schemes) based on the dividend/ capital gains generated on on the underlying stocks. The past performance of various funds is given in invetsmentz recommendations. The returns have also been indicated. Some funds have done well while not all funds have been better than the market. Your gain is the increase in the value of the fund due to appreciation in underlying stocks.

REGULATORY OVERSIGHT

SEBI is the regulating authority to ensure that the Mutual Fund functions in the matter stated in the offer document. In recent times SEBI has played an active role in curtailing the expenses incurred by the fund in management of the investments. The cost of management has been reduced from over 6% to less than 2.5%

There is also Association of Mutual Fund of India (AMFI) which has all Mutual funds as its members. This body also regulated its members and has rules for conduct of each member

Mutual Fund distributors or the last mile connectivity with the investors are regulated by SEBI. They are permitted to act as advisors and charge a fee from investor or act as a distributor and get fees from the Mutual fund. This protects the interest of the investor, since there is no conflict, wherein the distributor sells the products of MF that gives them high commissions.

BSE as well as NSE provides a platform wherein an investor through his broker can buy and redeem their mutual fund units. This is very convenient and easy

Records of all the mutual fund holdings is kept with the Registrars. They accept money, allocate units, pay dividends and redeem units on request, all on behalf of the Mutual Fund. They also send regular holding statement to you.

TAXATION

Mutual fund dividend is taxed as income from other sources. Difference in NAV at the time of purchase and redemption is taxed as capital gains tax. If the scheme selected is debt scheme, then long term capital gains will accrue after 3 years of investments. In case of equity scheme the long term, capital gains arise after one year.

ELSS is a scheme floated by most mutual funds that permit saving in taxes, sicne there is a rebate on investment. There is a 3 year lockin for this investment. Click here for more information on ELSS.

YOUR INVETSMENT REPORTS

It is advisable to check your reports regularly on your holdings and their valuation. It is necessary to rebalance your portfolio is there is consistent bad performance by a fund. We can advise you in the same . Click here for reports.