Time to Invest in Mutual Fund

Amongst the various product innovations in the investment world in the last 100 years, Mutual Funds are considered as most path-breaking. The first mutual fund was Massachusetts investors trust formed in Boston in 1924.

This is an ideal investment product for all investors regardless of any age, gender, Income level, risk profile or educational qualifications.

Here are the clear advantages for you:

· Diversification: you can invest in a diversified basket of stocks and/or bonds by simply investing in a single scheme.

· Professional Management: your money is being managed by a team of qualified and experienced fund managers, research analysts, dealers who in turn are supported by software, systems and processes. They are focused to deliver superior risk adjusted returns and add value to your investment.

· Liquidity: you can withdraw your money anytime, in case of any emergency need. Barring a few tax saving (ELSS) schemes which have a 3 years lock-in period, most schemes are open-ended and offer daily purchase and sale facility.

· Transparency: This is the most transparent investment product, since you will know exactly where the fund manager has invested your money, you will also know the value of your investment on a daily basis (as the fund will declare a daily NAV-net asset value) Apart from this almost all fund schemes declare a monthly factsheet in which a detailed list of instruments are mentioned, wherein your money has been invested.

· Low cost: This is a low-cost product when you compare the immense benefits that it will offer you to help you achieve your life goals.

· Wide choice: You have a wide choice of schemes available to suit your every need (e.g.: whether you want to invest for a period of 30 days or for 30 years… there is a scheme to fit your every need)

· Well Regulated: SEBI (Securities and exchange board of India) has a very comprehensive and exhaustive set of rules and regulations for the mutual fund industry which should give you comfort that your money will be invested and monitored as per the regulations.

· Tax Benefits: This product enjoys multiple tax benefits. Dividends in equity funds are tax-free, all long-term gains (long-term is if you sell your investment after 1 year of holding) in case of equity and balanced funds are tax-free.

In case of debt funds, the long-term capital gains (long-term is if you sell your investment after 3 years of holding) is taxed at a lower concessional rate with the option of an indexation benefit also available.

There are funds called as ELSS (equity linked savings schemes) which offer you tax saving under section 80C of the income tax act. They have a 3 years lock-in and all the capital gains is tax-free.

· Mode of investment: The ideal way to invest is to register for a systematic investment plan (SIP). Invest a fixed sum of money every month, with full discipline and achieve your long-term life goals like retirement and child’s education. Have at least a 10 year time frame in mind, the longer the better as it allows your investment to compound and grow faster and undisturbed.

Do not withdraw any money from the SIP unless you face an emergency situation like sudden hospitalization or a job loss.

Add fresh money to your SIP when you get a bonus or sudden cash windfall from any source.

If you have lump sum money, then register for a systematic transfer plan (STP). In this case, you invest this money in a liquid fund scheme and from the liquid fund you give the instruction to the fund-house to transfer a fixed amount to an equity fund scheme every month on a certain date.

The benefit is that your money in liquid fund earns reasonable money-market linked returns, which carry minimum risk and the money transferred to the equity fund scheme will earn long-term equity linked returns, which will compound over many years.

In both cases of SIP and STP, your clear benefit is that you get an average price and you avoid the volatility and get emotionally detached from the equity market ups and downs.

Having read the benefits the best time to invest in mutual funds is NOW!!

Call your investment adviser and start TODAY!!!

Happy Investing!!!

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