Mutual Funds Basics

When investing in mutual funds, investors can invest under different options, such as growth option, payout of income distribution-cum-capital withdrawal option, income distribution-cum-capital withdrawal reinvestment option, etc. Each of these different options carries its respective pros and cons. This article aims to discuss each of these three options briefly to help the investors decide on choosing amongst these three options:

Mutual funds have been steadily emerging as preferred investment options for retail investors and have become one of the attractive avenues to invest money. Such preferences arise from the convenience of investing in mutual funds and a wide range of mutual fund schemes investors may choose from. Such mutual fund schemes may invest in different asset classes, but also across spectrum of investments within the same asset class.

Retirement planning is one of the ignored facets of financial planning since the millennial population does not believe in saving for the future but instead lives in the present. In contrast, it becomes crucial to have a healthy financial corpus to take care of the life post-retirement in the absence of any formal social security scheme in India. The post-retirement life is often considered the second innings when one can fulfil their pending aspirations.

Mutual funds are investment products that create a portfolio of securities from the money invested by different investors. The investors can invest in mutual funds by submitting the application form physically at any official Points of Acceptance, through the website/ mobile app of the mutual fund house, or digital options provided by Registrar & Transfer Agents or any other online aggregator’s platform.

The brother-sister relationship is one of the sweetest in the world. Raksha Bandhan, an age-old festival, celebrates this divine and precious bond. A sister ties Rakhi on her brother's wrist to remind him about his responsibility to protect her. The brother, in turn, swears to protect her under all circumstances and by all means.

When it comes to money management, it is always vital for the investors to know the expenses associated with their investments, as such costs and charges directly eat into their returns. Some of the expenses may be unavoidable for the investors, like fund management expenses, etc., for it adds value to the mutual fund scheme. However, investors may avoid one such charge if they diligently plan for their investment redemption, i.e., exit load.

What is Exit Load?

investors can choose to invest in different mutual fund schemes to suit their risk appetite, financial goals, and investment horizon. People generally consider liquid funds and debt funds as different mutual fund categories. However, this is not the case.

Debt funds are a larger category of mutual fund schemes, which include overnight funds, liquid funds, duration funds, gilt funds, credit opportunities funds, etc. A liquid fund is a subset within the broader universe of debt funds.

New-age and millennial investors prefer investing in equities directly as they can track the movements of their top stock picks and attribute the investment performance to themselves. Further, the intra-day price movements in share prices create further excitement for some investors. However, direct equity investing may be complex since it requires a lot of research and adequate knowledge of stock markets in general.