Beginner

While you are planning for your taxes, one may choose to invest in a variety of investment options to save tax. Section 80C provides a full bouquet of options for the taxpayers to choose from, including the Equity Linked Savings Scheme (ELSS) with a tax benefit of up to Rs. 1.50 lakhs in aggregate for all the options. While this tax benefit available under Section 80C is most commonly known, there are investment avenues available under other sections of the Income Tax Act as well, which provide tax benefits to the investors.

While you are creating an investment portfolio, you must not overlook how mutual funds are taxed. Different taxation rates applicable to different types of investments, and such rates may specific investment options more attractive than others.

If one has ever invested in mutual funds, the folio number is the address where the mutual fund units are housed. A folio number is to mutual funds, what bank account number is to bank. Like one may have multiple bank accounts with different banks and even multiple savings/ deposit accounts with the same bank, one may also have numerous folios with a single mutual fund house and across various mutual funds. 

Mutual funds offer a wide range of investment options to the investors, to suit different risk profiles, investment horizon, and financial goals. An investor may choose to invest in equity schemes, debt schemes, hybrid schemes, solution-oriented schemes, index funds, etc. as per their financial plans. One of the primary financial goals for a parent is planning for their child’s education. With high emotional value attached to this goal, one always intends to plan the best for his/ her children. 

KYC stands for 'Know Your Customer' and is one of the obligations every investor must fulfil before investing in mutual funds. Through the KYC process, the market participants fetch relevant records of the investors to establish a unique identity for the investors in the mutual funds' records. 

The Hon’ble Finance Minister presented the Union Budget 2020 on 1st February 2020, which has proposed specific changes to the present income tax rates, which will be applicable for the financial year 2020-21 and subsequently, Finance Act 2020 has also been enacted. However, the new tax rates carry certain caveats before the taxpayers can adopt the reduced rates. As such, both the existing & new tax rate structures will continue to co-exist. 

Mutual funds are steadily emerging as one of the most preferred investment products amongst the retail investors for the benefits they bring on the table, including professional fund management at lower costs, diversification, preferential taxation rates for equity funds, etc. However, it is crucial to stay committed to the investment philosophy at all times. 

A Systematic Withdrawal Plan (SWP) is an investor-friendly measure that allows the investors in mutual funds to withdraw funds periodically. As such, one may enjoy the benefits of wealth accumulated in the past through periodical redemptions. Thus, SWP aims to achieve precisely the opposite of what Systematic Investment Plans (SIP) offer.

When it comes to saving from different financial goals, one can choose from a wide range of investment options. Such options may include traditional investment products like Unit Linked Insurance Plan (ULIPs), endowment insurance policies, etc. With the evolution of the financial markets, mutual funds have emerged as an investment option for wealth accumulation and wealth creation. 

As the name suggests, an overnight fund is a fund that invests predominantly in overnight securities having a maturity of one day. Overnight mutual fund schemes are favoured investment categories amongst debt funds for the investors seeking a very short-term parking of surplus funds.

Let’s learn more about the salient features of overnight funds.