Mutual Funds – Your key to grow wealth

Invest in best mutual funds or learn about how you should start investing in mutual funds

Top Mutual Funds in India for 2019

Equity Linked Saving Scheme aka ELSS is a tax saving mutual fund where one can save up to Rs.1.5 lakh in a financial year under Section 80C
Top Equity Fund
3Yr Return

Small Cap Funds

Mid Cap Funds

Mid Cap Funds

MultiCap Funds

Balanced Funds

MultiCap Funds

Balanced Funds

Balanced Funds

Balanced Funds

Balanced Funds

Top Debt Fund
3Yr Return

Credit Opportunities Fund

Gilt Fund

Liquid Fund

Liquid Fund

Short-term Fund

Short-term Fund

Short-term Fund

Short-term Fund

Short-term Fund

Everything you need to know about mutual funds

Mutual Funds are known to be one of the best investment avenues in India. Learn about Mutual Funds, how they work, benefits, and how to invest.
Introduction
What are Mutual Funds? How can I benefit by investing in Mutual Funds?
Types
Mutual Funds are broadly classified into Debt, Equity, Hybrid, and tax-saving funds. You can choose the fund(s) based on your investment portfolio.
Benefits
Investing in Mutual Funds with calculated risk offers higher returns than conventional options like PPF, NSC, and FDs.
How to invest
Set a financial goal and then choose the right Mutual Fund to achieve it.

What are mutual funds?

A Mutual Fund is formed when capital collected by various investors is invested in purchasing company shares, stocks, or bonds. Shared by thousands of investors, a Mutual Fund is collectively managed by a professional fund manager to earn the highest possible returns.
A Mutual fund
Money pooled from various individuals (investors)
Well-regulated (by SEBI)
Access to large portfolios
Professionally Managed
Higher returns than conventional investing
Allows to invest in small amounts
Investing in Mutual Funds is the easiest way to grow your wealth. The fund manager’s expertise is an important factor to consider while choosing the fund. All Mutual Funds are registered with the Securities Exchange and Board of India (SEBI) and hence, your investment is safe.
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Types of Mutual Funds
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Considering to invest in Mutual Funds? It is important that you understand the types of mutual funds and their features
 

Types of mutual funds

Mutual Funds are broadly classified into three categories based on their investment traits and risks involved.
Equity Funds
Equity Funds primarily invest in shares of different companies. Investors make a profit when the share prices surge, while they suffer a loss when the share prices fall. Investing in Equity Funds is apt for those who stay invested for a long period of time and are comfortable with moderate to high risk.
Debt Funds
Debt Funds primarily invest in fixed income government securities like treasury bills and bonds, or reputed corporate deposits. Investing in Debt Funds is less risky than Equity Funds. Debt Funds are apt for those who are risk averse and looking for a short term investment.
Balanced or Hybrid funds
As the name suggests, Balanced or Hybrid Funds invest in both equity and debt instruments to balance the risk, and maintain a certain rate of return. The fund manager decides the ratio to reap the best of both debt and equity instruments.

Why Mutual Funds?

Mutual Funds have various benefits that make them the most lucrative investment option.
Expert Money Management
Diversification
Systematic Investment Planning
Safe and Secure
Expert Money Management
Mutual Fund Companies have fund managers to choose the company shares, sectors, and debt papers in which the pooled capital would be invested. This decision would be made by considering the investors’ interest.
Lock-in Period
The Lock-in period is the duration in which investors cannot withdraw their Mutual Fund investment or sell their Mutual Fund units. It varies across Mutual Funds. Generally, open-ended funds do not have a lock-in period while the tax-saving funds (ELSS) have a lock-in period of 3 years.
Low Cost
Mutual Funds are a very affordable investment option for those who wish to invest in small amounts. Mutual Fund houses levy a small fee called expense ratio, it ranges from 0.5 to 1.5% of the investment. The expense ratio cannot exceed 2.5% as per SEBI regulations.
SIP Option
If you don’t have a lump sum to invest, then you can invest in a Systematic Investment Plan (SIP). With ClearTax, you can invest as low as Rs 500 an installment.
Flexibility to Switch Funds
A good investor knows when to switch funds to keep up or stay ahead of the market. There are various mutual fund schemes that allow you to switch funds. The fund manager must have an eye on the market to ensure the best returns while not getting burnt by the market volatility.
Investments Based on Goals & Focus Sector
Each investor invests in Mutual Funds with a financial goal to achieve. There are funds with varying risk factors that help you in achieving all kinds of goals.
Diversification
Mutual Funds invest across various asset classes and company shares to mitigate risk. When one asset class underperforms, gains from other asset classes will negate the loss. However, it is recommended not to invest in too many (more than 5) as it may get difficult to monitor the performance of all avenues.
Flexible Tenure
Equity-linked savings scheme (ELSS) is the only Mutual Fund that comes with a lock-in period of three years. This gives investors enough flexibility in terms of their financial goals, whether short-term or long-term. Investing over a certain timeframe makes it easier to plan when and how to invest.
Liquidity
Investing in Mutual Funds offer liquidity. You are allowed to redeem your investment at any time. There is no requirement of justifying your decision or searching for a buyer. You just have to place a request with your fund house and they will credit the money into your bank account within 3-7 working days.
Handpicked Funds
There are various Mutual Funds based on investment goals, individual risk appetite, sectors, and fund size, among others. Considering the number of options that are available, it can be a herculean task to research and compare the performance of various funds. ClearTax has handpicked funds suiting your profile.
Ease of Trading & Transaction Experience
Buying, selling, and redeeming fund units at the current market price per unit (NAV) is quite simple. All you have to do is place a request with the Mutual Fund House and the fund manager will take care of the rest. The liquid nature of Mutual Funds can help you in case of an emergency situation.
Tax Efficiency
Investing in ELSS offers a twin benefit of tax deductions and wealth accumulation. Investments in ELSS are eligible for tax deductions under Section 80C of the Income Tax Act, 1961. You can deduct a maximum of Rs 1,50,000 a year. ELSS offers the highest returns among all Section 80C instruments.
Investment Safety:
All Mutual Fund houses are under the purview of the Securities and Exchange Board of India (SEBI) and the Association of Mutual Funds in India (AMFI). Both SEBI and AMFI are government bodies and hence, you can consider your Mutual Fund investments to be as safe as bank deposits.
Ease of Tracking
Investors might not have the time to analyse the performance of their Mutual Funds investment. To make things simpler, Mutual Fund houses provide investors with regular statements which makes it easy to track the performance of the fund(s).

Get Better Returns with Mutual Funds

Rs 1,000 invested monthly for 20 years in different investment options will become
Bank
3.65 Lakh
@4% p.a
Fixed Deposit
4.82 Lakh
@6.5% p.a
Gold
4.3 Lakh
@5.5% p.a
Mutual Fund
15.2 Lakh
@15% p.a
Who should Invest?
Mutual Funds make investing easier for you. Each fund is designed to fulfill different goals. It is particularly useful for those who do not have enough time to research and choose wisely.
When to Invest?
Factors to consider before investing
Funds Availability
Market Conditions
Investment Duration
Expected Returns
Investors may find it difficult to analyse funds by considering the factors mentioned above and hence, investing in SIP is the best option they have. There is no specific time that is considered the best to invest. The best time to invest is when you have money in hand. You shouldn’t worry about the market volatility, and not every Mutual Fund invests in equity instruments.

How to Invest?

Thanks to the digital wave, you can easily access mutual funds nowadays. You may invest in mutual funds using any of the below options.
Direct Investment
Visit the nearest branch of the fund house to collect an application form or download it from the web. You must go through the fine print carefully and clear all your doubts before investing.
Agents
These are sales professionals who reach out to potential customers and inform them about the various fund options. You can choose a fund based on your income, investment goal, and risk appetite. An agent helps you with the application process, transactions, redemption, and cancellation. They charge a commission for their services.
Online (Distributors/Fund Houses)
Buying/selling Mutual Fund units online is common today. This helps in saving time and efforts, and most importantly, makes it easier to compare various funds to make an informed decision. ClearTax is one such portal that handpicks the best Mutual Funds from the country’s top fund houses for you, absolutely free of cost. All you need to do is enter your personal details and make the payment. The entire process can be done in less than 5 minutes.

FAQs (Frequently Asked Questions)

As a taxpayer, you are entitled to deduct up to Rs 1,50,000 a year under Section 80C of the Income Tax Act, 1961.
What is SIP?
Systematic Investment Plan (SIP) is an investment option offered by Mutual Funds which allows investors to invest small amounts on a regular basis instead of investing a lump sum. Your frequency of investment can be weekly, monthly, or quarterly.
How to choose the right Mutual Fund?
Our experts have handpicked the best possible funds exclusively for you, based on your requirements. These funds are handpicked after analysing their past returns, the fund manager’s performance, and consistency of returns.
How to redeem Mutual Fund units?
You can redeem Mutual Fund units anytime from your ClearTax Investment Dashboard. Your money will be credited into your bank account within 3- 7 working days, post-redemption.
What is the time period considered for the purpose of Income Tax?
Income Tax is levied on the annual income of taxpayers. It is levied based on the income you earn in each financial year (1 April of this year till 31 March of the next year) and not the calendar year. The previous year is a period for which a person has to pay tax. Assessment year is a 12 month period following the previous year, during which a taxpayer files his/her ITR.