Know what Mutual Funds India Offers and How you Can Invest in Them.

• Breaking Down Mutual Fund Investments

●       Investment strategies that enable you to club your cash with other investors to purchase a set of stocks, bonds, equities, debentures or other securities that might be difficult to recreate on your own are Mutual Funds Investment. This is usually known as a portfolio.  Mutual Funds (NAV) that is the Net Asset Value is the price of the mutual fund. NAV is calculated by the total worth of the securities in the portfolio, divided by the count of the fund's outstanding shares.

●    This price changes basis the value of the securities held by the portfolio at the end of each business day. It is crucial to note that mutual fund investors do not actually own the securities in which the fund invests; they only own their share in the fund.

Following are the three different types of taxes, Investors who are not tax protected, need to be aware of:

●       Dividend income, which is generally taxed at your usual income tax rate.

●       Capital gains from the sale of securities, which can be taxed at your ordinary income tax rate or the more favorable long-term capital gains rate, depending on how long the securities were held by the fund.

●       Capital gains when you sell or exchange shares of the fund at a profit; those capital gains could also be taxed at your ordinary income tax rate or the more favorable long-term capital gains rate, depending on how long you held those shares.

Mutual Funds India

●  Mutual funds was first introduced in India in 1963, when the Government of India launched Unit Trust of India (UTI). Mutual Fund scheme should be selected according to your risk capacity and the frequency at which you desire to receive the dividends from such schemes.

●       Mutual Fund schemes are differentiated as per their payout time frame into two groups -

              (a) Dividend Paying Schemes

              (b) Reinvestment Schemes

●       Recently there are Mutual Funds which also let you invest in gold or other asset classes. These schemes can be accessed from the convenience of your home through Mutual Funds Online.

 Advantages and Disadvantages

Advantages

●  One of the primary advantages of mutual funds investment is that they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities.

●     Ergo, each shareholder gets the opportunity to proportionally take part in the gain or loss of the fund.

●       In mutual fund, it is wise to not have all your eggs in one basket. This is possible because purchasing shares in a mutual fund is also a convenient method to help diversify your investments.

Disadvantages

●       Investments in stock market are risky as the value of your investments fluctuates with the change in prices of the stocks that we have invested in.

●       Thus, a potent risk for an investor in Mutual Funds is the market risk.

•    However, different Schemes of top performing Mutual Funds have different risk profile that could guide you to mitigate the market volatility in a smart manner.