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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.

When it comes to investing in mutual funds, investors have a wide range of options to invest, like equity funds, debt funds, hybrid funds, solution-oriented schemes, etc. Even within the universe of equity funds, SEBI allows the mutual funds to offer schemes under different categories like large-cap funds, ELSS, small-cap funds, value funds, etc. 

<p dir="ltr">Traditionally, India has had a higher household savings rate. However, such savings went towards traditional investment products, which used to offer guaranteed returns, even when such returns were relatively lower. The love of Indians towards physical assets has been eternal, and thus, a part of savings used to get channelized into tangible assets like gold, and real estate.</p>

<p dir="ltr">Systematic Investment Plan (SIP) is an investment option wherein the investors may regularly invest in a pre-specified mutual fund scheme at periodic intervals. The investments continue to be made irrespective of whether the markets are going up or down. Retail investors continued to invest in mutual funds through SIP, was evident as the monthly SIP inflows in March 2020 have continued to hover above Rs. 8,000 crore mark for the 16th consecutive month.

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. 

<p dir="ltr"><span id="docs-internal-guid-3fef93dd-7fff-650d-4fa5-fabb8d141577">One would have often read a standard disclaimer for investing in mutual funds, &ldquo;</span>past performance is not a guarantee for future returns.&rdquo; This disclaimer tends to emphasise the fact that the historical returns generated by mutual funds may not be repeated in future periods. When one is investing in equity markets, one may not expect linear returns, and the returns may be volatile.

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. 

<p dir="ltr"><span id="docs-internal-guid-213348f3-7fff-2b85-30c4-677af3324ae1">It is often said, &ldquo;</span>one should not put all his eggs in one basket.&rdquo; Experts suggest investors must spread their investments across different asset classes, e.g., equity, debt, real estate, etc. Different asset classes have different risks and rewards associated with them, and it becomes crucial for the investors to balance the risk-reward trade-off to smoothen their investment journey.