Mutual Funds – Your key to grow wealth

Invest in best mutual funds or learn about how you should start investing in mutual funds
BENEFITS
  • Save income tax up to Rs 46,800
  • Lowest lock-in period of 3 years
FUNDS IN THIS BASKET
mutual funds 1
mutual funds 2
mutual funds 3
mutual funds 4
BENEFITS
  • High returns, balanced risk
  • Expertly chosen funds
  • Invest consistently to grow wealth
FUNDS IN THIS BASKET
mutual funds 1
mutual funds 2
mutual funds 3
mutual funds 4
BENEFITS
  • Just started working?
  • Get into the habit of investing
  • Grow wealth for the cost of beer and pizza over weekends
FUNDS IN THIS BASKET
mutual funds 5
mutual funds 6
mutual funds 7
mutual funds 8
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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

Invest

Mid Cap Funds

Invest

Mid Cap Funds

Invest

MultiCap Funds

Invest

Balanced Funds

Invest

MultiCap Funds

Invest

Balanced Funds

Invest

Balanced Funds

Invest

Balanced Funds

Invest

Balanced Funds

Invest
Top Debt Fund
3Yr Return

Credit Opportunities Fund

Invest

Gilt Fund

Invest

Liquid Fund

Invest

Liquid Fund

Invest

Short-term Fund

Invest

Short-term Fund

Invest

Short-term Fund

Invest

Short-term Fund

Invest

Short-term Fund

Invest

Everything you need to know about mutual funds

A mutual fund is known to be one of the best investment avenues in India. Learn about what are mutual funds, how it works and benefits of mutual fund investment.
Introduction
What are mutual funds and how you can benefit by investing in it?
Types
There are different types of mutual funds depending on the investment portfolio. Equity, Debt, Hybrid and tax saving are the main few.
Benefit
Mutual funds give higher returns on investment with calculated risk compared to other types of investments like FD, PPF, NSC, stock market.
How to invest
It is important to fix an investment goal and choose the right fund(s) to achieve your goal.

What are mutual funds?

A mutual fund is formed when capital collected from different investors is invested in company shares, stocks or bonds. Shared by thousands of investors (including you), a mutual fund is managed collectively to earn the highest possible returns. The person driving this investment vehicle is a professional fund manager.
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 means to grow your wealth. This is why the fund manager’s expertise (thereby the fund house’s reputation) is an important factor to consider. All mutual funds are registered with SEBI (Securities Exchange Board of India) and therefore, quite safe.
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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

Though this classification could be really complicated, largely, Mutual Funds can be broadly categorized into three types based on their investment traits and risks involved
Equity Funds
Equity funds invest the money collected from individual investors into shares of different companies. When the price of the share rises, the investors make a profit and vice versa. Equity funds are suitable for those who stay invested for a long time and who have a higher risk appetite.
Debt Funds
Debt funds invest in fixed income government securities like treasury bills and bonds or reputed corporate deposits. It is less risky than equities. Debt funds are suitable for people who are risk-averse and looking at a short investment horizon.
Balanced or Hybrid funds
As the name suggests, Balanced funds invest in both equity and fixed income funds to balance the risks and maintain a certain return rate. The fund manager decides the ratio to reap the best of both.

Why Mutual Funds?

Mutual funds offer various features and benefits as an investment method, hence making it the most lucrative investment option.
Expert Money Management
Diversification
Systematic Investment Planning
Safe and Secure
Expert Money Management
Individual investors may not have the time or professional expertise to decide which fund to invest in or how to. A mutual fund company employs professional managers to manage the money pooled in their funds. They decide which company share, sectors/stocks or debt papers to invest the money or whether to hold on to the capital. Their decisions will be in the investors’ interest.
Lock-in Period
Lock-in periods differ for every mutual fund. Starting from one month to none at all. For instance, ELSS is a tax-saving mutual fund scheme with the shortest lock-in period of 3 years. The longer the holding period (beyond the mandatory lock-in), the better returns you earn and vice versa. Open-ended mutual funds generally do not have lock-in periods and you can close/withdraw them anytime.
Low Cost
Mutual funds are an affordable investment option for people who do not have the wish to make a large initial investment. Fund houses charge a nominal fee, called expense ratio, that ranges from 0.5% to 1.5%, and cannot exceed 2.5% as per SEBI regulations. They deduct the expense ratio from the money you invest. Investors bear the transactional expenses proportionately.
SIP Option
If you do not wish to make a one-time investment, you can invest in smaller and manageable installments called SIP. Systematic Investment Plans foster financial discipline in investors. As it averages the rupee cost, SIP is an ideal alternative to mid-income and low-income investors. You can start with as low as Rs. 500 to make your initial installment with ClearTax.
Flexibility to Switch Funds
A serious investor (or fund manager) knows when to switch from the current fund to another to keep up with or stay ahead of the market. There are many mutual fund schemes that allow this. The asset manager has to keep a sharp eye on the market to know this. This ensures better returns while not getting burned by market volatility.
Investments based on Goals & Focus Sector
Every investor has a financial goal. It could be a short-term goal such as an international holiday or a long-term goal like fixed income post retirement. Also, different schemes focus on different assets and outcomes with varying risk factors. This allows investors to drive money to various asset classes as per their risk appetites and goals.
Diversification
Mutual funds invest across assets, company sizes and shares to spread the risks. When one underperforms, the other gains can even out the loss. This is diversification. However, it is recommended to not invest in too many (more than 5) as it may get difficult to monitor. Also, stocks of these companies always tend to be homogeneous, which beats the purpose.
Flexibility in terms of tenure
Most mutual funds don’t have time constraints unless specified otherwise. ELSS, tax saving fund is the only mutual fund that comes with a minimum lock-in period of 3 years. This gives investors ample flexibility in terms of their financial goals, whether short-term or long-term. Investing for a certain term also makes it easier to plan when and how to invest and investment horizon.
Liquidity
Mutual funds are completely liquid investments. You can redeem your invested money any time you want. There is no need to justify your decision or hunt for a buyer. Simply place a request with your fund house, and get the money credited to your account in 2-3 working days.
Spoilt for choice
There are different types of mutual funds based on investment goals, individual risk appetite, sectors and fund size among others. However, it can be a tiring task to do research and analysis. ClearTax can handpick tailored plans from the best fund companies in the country based on your profile.
Seamless Trading & Transaction Experience
Buying, selling and redeeming a fund at the current market price per unit (NAV) is quite simple. All you need to do is put in a request with the fund company and the fund manager will take care of the rest. With its easy liquidity, mutual funds can serve as your emergency funds.
Tax Efficiency
Mutual fund (ELSS) has historically generated superior returns compared to the more traditional 80-C options like FD, PF, etc. Budget 2018 re-introduced tax on long-term capital gains exceeding Rs. 1 lakh. This amendment on LTCG only applies to equity and equity-oriented schemes. However, due to the higher returns, capital gains on ELSS will still be more.
Safe & Secure
All mutual fund companies are under the purview of the government body, SEBI (Securities Exchange Board of India) and AMFI (Association of Mutual Funds in India). It is as safe as putting money in a bank.
Easy to Monitor
Investors may not have the time or knowledge to analyze the performance of mutual funds in an objective manner. This is why fund houses provide investors with regular statements, making it easy for investors to track their earnings from mutual funds.

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. This is particularly useful for people who do not have the time or patience to research and choose wisely.
When to Invest?
Factors to consider before investing
Availability of Funds
Market Conditions
Desired Duration of Investing
Expected Returns
However, for an individual, it could be quite difficult to factor in all of these. Hence, one should go for a SIP starting today.
The best time to invest in mutual funds is when you have money. This is not to imply that these funds are expensive. Rather, last-minute investments (eg – at the end of the financial year) often stems from hasty decisions. Rise and fall of the stock market as reported can influence one’s decisions. Truth is not every mutual fund invests in stocks.
If you consistently notice poor performance of your investments, don’t hesitate to sell it. The basic rule of any investment is to start early. The more you delay, the more you will lose out on potential returns. So, the right time to invest is always NOW.

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
Investors can directly contact fund houses to apply for a scheme and save on brokerage. Get the form from the nearest branch of the fund house or download it online. Ensure you go through the fine print and clear all your queries before investing.
Agents
These are sales professionals who reach out to potential customers and inform them about the different fund options. You can choose funds based on your income, investment goal, and risk profile. The agent can help you with applications, redemptions, transactions, and cancellations among others. They charge a commission for their services.
Online (Distributors/Fund Houses)
Buying/selling a mutual fund unit online is almost the norm today. This not only saves time and effort but also makes it easy to compare funds and make informed decisions. ClearTax is one such portal that handpicks the best mutual funds from country’s top fund houses for you at zero costs. Just enter your details and make the online payment in less than 5 minutes.

FAQs (Frequently Asked Questions)

As a tax-paying citizen, the Section-80c of the Indian Tax Act allows you some breather – a deduction of up to 150,000 from your total annual income.
What are SIPs?
SIPs are Systematic Investment Plans where the money is deducted from your bank account and invested automatically. With a SIP, you’re able to purchase fund units at different levels of the market and benefit from rupee cost averaging.
How should I select mutual funds to invest in?
After rigorous modeling, we choose the right mix of funds that is best suited for your needs. We look at fund’s past returns, fund manager’s performance, it’s consistency, performance against its peers among other things to shortlist the funds.
How to redeem the investment?
You can withdraw your investments anytime from your ClearTax Investment Dashboard. After redemption, the money is usually transferred to your registered bank account directly in 7 working days. Tax saving funds (ELSS) have a 3-year lock-in after which you can redeem it.
What is the time period considered for the purpose of Income Tax?
Income Tax is levied on the annual income of a person. The year under the Income Tax Law is the period starting from 1st April and ending on 31st March of the next calendar year. The Income Tax Law classifies the year as (i) Previous year, and (ii) Assessment year.